In 2021, Sam Bankman-Fried, also known as SBF, found himself in a situation where the substantial crypto profits of FTX employees posed a threat of early retirement. This prompted him to make significant rule changes.
As recounted in Michael Lewis’ book centered on SBF, titled “Going Infinite,” SBF exercised his exclusive authority to extend the lockup period for his employees’ Serum (SRM) holdings by an additional seven years beyond the original plan. This move effectively prevented them from cashing in on their paper profits.
“They now understood that if he had changed the rules once, he might do it again. They became less enthusiastic about their Serum.”
Serum, a decentralized exchange (DEX) ecosystem on the Solana (SOL) blockchain, had strong ties to both Bankman-Fried and FTX. Like many token launches, SRM featured a lockup period for founders and early employees as a safeguard against immediate coin dumping on the retail market as soon as it gained traction.
In September 2021, SRM’s value soared to $13.70, turning any employees who had received tokens at the launch price of $1.70 the previous year into “remarkably wealthy” individuals, according to Lewis.
FTX, facing financial difficulties in November 2022, disclosed that it held approximately $2.2 billion worth of SRM, surpassing the holdings of any other digital asset in its portfolio. This quantity far exceeded the actual circulating supply of SRM, rendering most tokens illiquid and unsellable without causing a severe price collapse. At present, SRM trades at just $0.04, as reported by CoinMarketCap.
By the end of November, Binance had delisted most of SRM’s trading pairs, leaving the cryptocurrency with limited liquidity primarily supported by a few mid-sized exchanges. In response to FTX’s downfall, the project team initiated a hard fork to distance themselves from the influence of the collapsed exchange.
Lewis’ book also made the startling claim that SBF had contemplated paying former President Donald Trump $5 billion to refrain from running for re-election in 2024. This revelation drew significant criticism from figures within the crypto and financial industries, who accused Lewis of being lenient in his portrayal of SBF and failing to grasp the gravity of the alleged fraudulent activities.
As SBF faces his first trial, he stands accused of multiple counts of conspiracy and fraud related to his involvement with FTX.