From the ‘Forbes’ list to the abyss: The end of the line for three cryptocurrency visionaries

December 2021. Bitcoin has just hit an all-time high, rising above $69,000. The specialized portal Coindesk awards the title of most influential man in the crypto world to Sam Bankman-Fried (SBF), the Californian who leads the FTX trading platform. Also on the list are Do Kwon — a South Korean citizen, founder of the digital currency TerraLuna — and Changpeng Zhao (CZ), the Chinese-Canadian boss of Binance, FTX’s greatest competitor.

The three men drew the attention of Forbes magazine. The publication placed Kwon among the 30 most important personalities in Asia under the age of 30, with SBF and CZ being included in the ranking of the richest people on the planet.

For SBF, these were the glory days. The American was running his business from a mansion in the Bahamas with a group of friends. Some media compared him to the famous investor Warren Buffett. And his net worth wasn’t too shabby, either: with $22.5 billion to his name, he was only behind Mark Zuckerberg when it came to amassing such a fortune before the age of 30. The Canadian CZ wasn’t far behind him, with Forbes estimating his worth at around $15 billion.

During these high times, the three young men tweeted with vigor, promising a better life for all those willing to place their savings in the emerging universe of cryptocurrencies, which were (supposedly) destined to take away the monopoly of money from central banks. “The lunar cycle has only just begun,” Kwon wrote. After leaving Stanford University, where he studied computer science — the same degree that CZ completed — he worked for Apple and Microsoft. A fan of video games, on Sundays, he still shares with his millions of followers on X (formerly Twitter) photographs in which he appears playing Starcraft, a futuristic adventure that pits three races against one another for control of the galaxy.

In 2021, TerraLuna’s valuations were making those who bought the cryptocurrency mountains of money, fueling Kwon’s reputation as a visionary genius. The world seemed like a kind place for the young innovators. SBF — the son of two prestigious law professors and an MIT graduate in Physics — also escaped his lucrative work by playing Starcraft and League of Legends.

The crypto aristocracy presented itself to the world with a certain nerdy esthetic, one that fit in with the new digital ecosystem of Silicon Valley and the addiction to screens. In addition to amassing money, they sought to push an unprecedented technological leap. “The most exciting thing about cryptocurrencies is that they will facilitate the Great Migration of human activity from the physical world to the internet,” Kwon affirmed.

Some of the richest and most eccentric men from successful companies — such as Elon Musk or Jack Dorsey — gave the crypto bros their blessing, while also promoting them on social media. And, as is usually inevitable with any business that involves quick profits, Wall Street quickly entered the scene. The American platform Coinbase began trading and making investments in cryptocurrencies, allowing the world to become accessible to stock traders.

But then, the crypto rise experienced a backlash. An army of detractors was joined by numerous Nobel Prize winners, central bankers and economists. Amidst growing regulatory obstacles, intense lobbying began. CZ was seen with ministers and heads of state from around the world on a frenetic tour. He was photographed with President Emmanuel Macron, after promising to place his firm’s European headquarters in Paris (in exchange for friendly regulations). And, of course, he took a selfie with El Salvador’s President Nayib Bukele, a crypto enthusiast who wants to turn his Central American nation into the world power of cryptocurrencies.

SBF, meanwhile, unceremoniously drew from his accounts to hire sports stars, sponsor NBA arenas and advertise in the very expensive Super Bowl intermission. He also sought to expand his political influence by pouring cash into Joe Biden’s 2020 presidential campaign, becoming the Democratic Party’s second-biggest donor, with a total contribution of $5.2 million (former New York Mayor Michael Bloomberg gave $56 million). Winning over politicians was a priority for the crypto elite.

But then, something went terribly wrong.

In December 2023, Bitcoin is worth a third less than in its best times… although it seems to be recovering from a dark period of price declines and bad news. We’re out of the so-called “crypto winter.” As the industry tries to adjust course, none of the former leaders of the sector are on the frontlines to see it. Do Kwon has been in police custody in Montenegro for the past eight months, after being detained at that country’s airport in a desperate attempt to prolong his escape. The authorities have just authorized his extradition, although nobody knows exactly where he will be sent. Both South Korea and the United States want him to face charges: he’s accused of having defrauded investors of $40 billion, after leaving TerraLuna in ruins. In May 2022, his net worth went to zero over the course of just a few days.

FTX went bankrupt a year ago. Sam Bankman-Fried was subsequently arrested in the Bahamas and extradited to the United States. He faces a maximum sentence of 110 years in prison for being responsible for a $10 billion hole. The testimonies given by members of his team — and the auditor who took charge of the restructuring of the firm, to try to recover as much money as possible — indicate that the platform didn’t maintain appropriate bookkeeping and records, nor proper security controls. Software was allegedly used to hide the misuse of clients’ funds, which were used to purchase homes and luxury items.

Everything came down, in the auditor’s words, to “a very small group of people without experience.” An ocean liner that was too big for them ended up in their hands and sank. The users haven’t recovered their money, while SBF is awaiting the outcome of his trial at Brooklyn’s Metropolitan Detention Center in New York. He shares a space with other high-profile detainees, such as the former president of Honduras, Juan Orlando Hernández, who stands accused of cocaine trafficking. There, in prison, the currency is different. According to The Wall Street Journal, Bankman-Fried paid for a haircut with cans of mackerel.

Changpeng Zhao, meanwhile, is still free. Last month, the U.S. Department of Justice forced him to leave his position as CEO of Binance. In an agreement with the American authorities, he agreed to pay a fine of $50 million after pleading guilty to violating money laundering laws. In the U.S., Binance will also have to dig deep into its pockets and pay around $4 billion, although the sanction doesn’t jeopardize the survival of the company, which is the absolute global leader in crypto transactions. It continues to charge lucrative commissions in exchange.

Zhao — a leader in the crypto community, with 8.7 million followers on X — will even be able to maintain shareholder control of the company. His punishment, however, is to lose the managerial power that led him to continually rub shoulders with political and business leaders. He admits that he’s surprised by this abrupt change. “I have not had a single day of real (phone off) break for the last six-and-a-half years. I am enjoying all the free time I suddenly have now,” he tweeted, shortly after learning of his forced departure.

One-time rivals Do Kwon and Sam Bankman-Fried — stripped of their fortunes and businesses and hated by the millions of customers they left without savings — probably wish that their biggest concern was something as trivial as figuring out how to spend their free time.

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