Up until last week, Sam Bankman-Fried looked destined to go down in crypto history as a hero—for helping bring digital currency into the mainstream, and for spearheading a philanthropic movement some heralded as a sign of the sector’s maturity and growing stability.

The 30-year-old Bankman-Fried, who at the peak of his fortune was worth $26 billion, was the founder of FTX, a crypto exchange that had quickly become one of the world’s biggest. He had cultivated an image as a kind of new-style magnate, a major donor to the Democratic party in the U.S., and among Joe Biden’s largest donors in 2020.

In a matter of days all that has changed. The reputation Bankman-Fried built up has crumbled. And the destruction of his mythology will almost certainly bring down the standing of the broader crypto world. (Bankman-Fried did not respond to a request to comment for this story.)

Some, including another larger-than-life titan, are now claiming that they always had Bankman-Fried’s number. “My bullshit meter was redlining,” Elon Musk said of an encounter with Bankman-Fried, in a Twitter space last weekend. “It was like, this dude is bullshit—that was my impression.”

But the founder widely known by his initials, SBF, certainly won over many in the crypto, finance, tech, politics, and pop-culture worlds. For those who took him at his word, the questions remain: Was he idealistic and overconfident? Slick and fraudulent? Or was he just a risk-taker who got outplayed?

In any case, the spectacular implosion of SBF’s empire in less than a week is an extraordinary tale with more twists than a Netflix thriller.

The makings of Sam Bankman Fried’s “abnormal psychology”

Bankman-Fried’s parents are both Stanford University law professors—Barbara Fried, whose focus is legal philosophy, and Joseph Bankman, whose focus is tax. The two subscribe to the philosophy of utilitarianism: Life should be lived, and key decisions made, with the goal of maximizing happiness for as many people as possible.

SBF graduated with a bachelor’s in physics from the Massachusetts Institute of Technology, then joined the quantitative trading firm Jane Street Capital. Following an ideal from utilitarianism, Bankman-Fried donated half his earnings to charity from the beginning of his career. He’s a vegan, he has said, because he’s repulsed by the cruelty of the meat industry.

“After leaving college, he started to trade in crypto markets and found an arbitrage opportunity where he and his firm could buy bitcoin in one market and sell in another,” Haider Rafique, chief marketing officer of OKX, a competing crypto exchange, tells Fortune. “That became a profitable business.”

The business was Alameda Research, a crypto trading group SBF established in 2017 while still at Jane Street. That venture spawned FTX, a company he set up in 2019 out of frustration that existing crypto exchanges didn’t do more high-risk, complex trades. The company is based in Nassau in the Bahamas—offshore like many crypto exchanges, which helped it escape the scrutiny of American regulatory agencies. Bankman-Fried gathered a group of friends from Jane Street and MIT, and they ran his sprawling empire while living as roommates in a Bahamian penthouse that has been described as a hotbed of intermingled dating.

In an August 2022 cover story, Fortune highlighted how Bankman-Fried had been hailed as “the next Warren Buffett” by some within the crypto industry (while cautioning that it might all “end in disaster”). Associates praised him for his intellect, and his ability to dispassionately make big decisions based on calculations of risk. One source who knows him told the Times of London that SBF has “an abnormal psychology.” “I don’t think he’s a psychopath,” they added. “I think he’s a computer.”

That intellect helped SBF raise $1.8 billion in funding from investors. Meanwhile, FTX grew its profile in popular culture, buying the naming rights to the Miami Heat’s home arena. (FTX Arena is now looking for another name rights buyer.) Comedian Larry David acted as the hype man for the company in TV ads targeting retail investors. The supermodel Gisele Bündchen came onboard as an advisor to the company on environmental and social initiatives. Umpires in Major League Baseball and Formula 1 racers for Mercedes helped promote the FTX name through carefully positioned logos on shirts and chassis.

FTX had grown from a small, scrappy crypto exchange to one of the world’s biggest. And earlier this year, as inflation and broader economic volatility sent cryptocurrency prices plunging, Bankman-Fried framed FTX as the savior of the sector, wading in to bail out BlockFi, a crypto lender, and buying the assets of Voyager Digital, another, after it went bankrupt. The reason, Bankman-Fried said at the time: Someone had to save the reputation of crypto. “It doesn’t seem clear to me that there are others who are stepping up and doing that,” he told Decrypt.

In that Fortune interview, Bankman-Fried predicted that the Crypto Winter was winding down and that the sector would emerge stronger. “We’ve already seen the worst of it,” he said: “There’s a little more to come, but it’s not very bad.” He suggested that the downturn in crypto markets that saw prices retreat from all-time highs had been a necessary “weeding out” of bad players in the industry. “It’s been healthy that people have had to rethink how to value assets and had to be a little more grounded—and to realize that we’ll build back a stronger industry,” he said.

Now that Bankman-Fried’s own venture is imploding, that optimism looks misplaced.

The 48-hour downfall

As Bankman-Fried’s reputation as crypto’s white knight has collapsed, some are asking whether everything he built was a sham.

That’s because the numbers don’t stack up. At the time of its collapse, FTX’s main international exchange had $900 million in assets—and $9 billion in unbacked liabilities, according to the Financial Times. Across all his associated businesses, up to $50 billion in liabilities was owed to more than 100,000 creditors.

Alameda Research, Bankman-Fried’s trading firm, appears to have been using customer assets, as well as the FTT token that allows FTX users to trade on the exchange at a discount, as collateral to take on loans, according to CoinDesk. There were concerns that FTX might not have the assets to cover the liabilities because it was locked up in illiquid positions such as venture capital investments. Rumors are swirling that Alameda Research was brought down by its overexposure to the Terra crypto token, the price of which tanked in the spring and has been propped up since through clever accounting.

On Nov. 7, Bankman-Fried tweeted: “FTX is fine. Assets are fine.” His cryptic public statements appeared designed to reassure investors. They didn’t.

Even as Bankman-Fried downplayed his financial difficulties, he was engaged in a cutthroat competition with rival exchange Binance and its owner, Changpeng “CZ” Zhao. Once a friend and confidante of SBF, Zhao has been called the “king of crypto.” The competition between the two seems to have turned rather toxic: In recent months, for example, Bankman-Fried reportedly took some potshots at Zhao, alleging that he couldn’t enter the United States because of legal troubles.

This had the unfortunate effect of annoying the one man who may have had enough capital to save FTX from crashing. For his part, Zhao saw a weakness and took advantage of it: Thanks to Binance’s early investment in FTX, Zhao held large holdings of FTT tokens. On Nov. 6, Zhao declared he would dump Binance’s holdings of FTT tokens, causing flight from the token in the wider market. The price plummeted.

Bankman-Fried reportedly went cap in hand around Wall Street and Silicon Valley looking for financing to keep his company afloat as the price of FTT tokens continued to drop. No one would bite. The balance sheet was that bad.

It was a huge fall from grace for the man who had acted as the better angel of the industry, testifying to Congress about how to clean up crypto and offering philanthropic donations to foundations to better the world. He was the face of the Silicon Valley trend of effective altruism, a kind of utilitarianism on steroids. He spoke at conferences, once sitting alongside former President Bill Clinton and former U.K. prime minister Tony Blair.

Tony Blair and Bill Clinton on the same stage (and SBF.) You don’t see that very often these days, eh? pic.twitter.com/Vt5pn6egHn

— Dan Keeler (@dankeeler) April 28, 2022

Now, some are blaming Bankman-Fried’s effective altruism mindset for the predicament he and his exchange find themselves in. “Either EA encouraged Sam’s unethical behavior, or provided a convenient rationalization for such actions,” tweeted Dustin Moskovitz, a cofounder of Facebook and CEO of Asana. “Either is bad.”

Nic Carter, founder and general partner at crypto investment firm Castle Island Ventures, attributes SBF’s troubles to a fundamental insincerity. “His whole persona and façade is to dupe creditors, investors, and politicians,” said Carter, speaking on the phone to Fortune. “I think his whole altruistic persona was a demeanor, a way to redirect attention away from what he was doing: running an unregulated exchange offshore, with very little oversight or scrutiny.”

The collapse

After Zhao turned on his former friend, FTX’s stumble rapidly became a debacle. On Nov. 8, Binance declared it would buy the exchange, signing a letter of intent. At first Zhao said he was buying FTX to protect users and the credibility of the broader crypto market, including his own exchange—echoing the arguments that SBF had used when buying up distressed rivals just a few months earlier.

After that, “things deteriorated very quickly,” says Carter.

Zhao’s offer to sweep in and save FTX lasted nine minutes short of 29 hours. On Nov. 9, the official Binance account tweeted that the company had taken a deeper look at FTX, and didn’t like what it saw. “As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com,” the company tweeted. “The issues are beyond our control or ability to help.” The Associated Press later quoted an unnamed source linked to Binance saying that FTX’s books were a “black hole” where the assets and liabilities of FTX and the assets and liabilities of Alameda Research were intermingled and impossible to disentangle.

It was the kiss of death for FTX. For those who had read Bankman-Fried’s comments to Fortune just three months earlier, there was a sense of schadenfreude in the wording chosen by Binance as part of its four-part Twitter thread: “We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market,” they wrote.

The reference was unmistakable: This time, Bankman-Fried is the one being “weeded out.”

Back in August, Bankman-Fried highlighted the trust deficit in the crypto industry, and said he hoped to instill honesty in the sector. “I don’t want to have to worry when I’m doing a deal about whether the other side is going to try and fuck me in 20 ways I’m not anticipating,” he said. “Because if that’s true, just doing the deal becomes fucking impossible, right?” Be that as it may, there has been plenty of misplaced trust in this saga.

Bankman-Fried tried investors again—this time those already exposed to the company. He needed $8 billion, the Wall Street Journal reported, to cover requests from users to withdraw their cash from the exchange, which was happening at an ever-quickening rate as people began to worry that the whole thing was going to collapse. Far from giving him that cash, the investors followed in the footsteps of the customers: Sequoia Capital, which had invested $214 million in FTX just a few years earlier, downgraded the value of its investment to zero on November 10.

It was clear the jig was up. Even those closest to Bankman-Fried expressed a sense of betrayal: The entire staff of his philanthropic fund resigned on Nov. 10. In their parting letter as a group, they said they “have fundamental questions about the legitimacy and integrity of the business operations that were funding the FTX Foundation and the Future Fund.”

FTX’s crash took down one company that SBF had touted saving: BlockFi has recently suspended withdrawals due to its exposure to the exchange that had once been a refuge. FTX itself filed for bankruptcy on the morning of Nov. 11, simultaneously announcing Bankman-Fried had resigned as CEO. “I’m really sorry, again, that we ended up here,” he tweeted that day. “Hopefully things can find a way to recover.” To his staff, he was more blunt: “I fucked up,” Bankman-Fried told them.

The messy aftermath

If the bankruptcy of FTX wasn’t bad enough for those who had invested in the exchange, worse was to come. Late on Nov. 11, rumors began to spread through crypto Twitter that something suspicious was happening with FTX. Blockchain records showed that hundreds of millions of dollars were being yanked from wallets held on the FTX exchange—and not by their owners. It was, one observer said, like looting a corpse.

At the same time, FTX’s app started malfunctioning, with warnings shared on Twitter that the app had been compromised. In FTX’s official Telegram chat, Ryne Miller, FTX’s group counsel, pinned a post to the top of the page reading: “FTX has been hacked. FTX apps are malware. Delete them. Chat is open. Don’t go on FTX site as it might download Trojans.”

Three hours later, Miller tweeted once more: What had been seen as “abnormalities” were, in fact, simple procedure, and part of the Chapter 11 bankruptcy filings that FTX and FTX.us were going through. He didn’t explain why the warning of a hack had been pinned to the (now deleted) Telegram group. The apparently missing money hasn’t been accounted for.

Even now, after all that has happened, some still praise Bankman-Fried as a genius, and defend his intentions. Those chastising him for the decisions that tanked FTX overlook large parts of his career, said OKX’s Rafique.

“It’s no small feat what he accomplished,” he said. “Most people are bashing him right now. But I personally don’t want to forget the contributions he’s had in the industry. He’s had a congressional hearing to advocate for crypto. He’s done a lot of positive stuff. It’s really unfortunate what’s happening—both with Alameda and FTX.”

It’s certainly unfortunate for the once booming world of crypto, which still struggles to be seen as a reliable, orderly place to invest cash. Bitcoin and Ethereum prices are hitting the floor, and Zhao himself has called the collapse of FTX a shock for the crypto world akin to the 2008 financial crisis. White House press secretary Karine Jean-Pierre mentioned FTX as an example of why crypto regulation is needed. The Department of Justice and Securities and Exchange Commission is reportedly considering a probe into potential criminal activity. Bahamian authorities announced on Nov. 13 that they were looking into FTX; Bankman-Fried was reportedly interviewed by police as part of that investigation.

The downfall of FTX hinders attempts to build trust in crypto, reckons Neeraj K. Agrawal of Coin Center, a cryptocurrency policy think tank. But it should be seen as an isolated incident, he argues, not as a systemic failure of the industry.

“It’s important to remember that a centralized business that sends and stores cryptocurrency is an entirely different thing than the decentralized cryptocurrency networks themselves,” Agrawal wrote to Fortune. “A business behaving badly and failing does not say anything about the security of something like bitcoin.”

Castle Island Ventures’ Carter, meanwhile, says FTX’s collapse is a blessing in disguise, as catastrophic as it has been: “This guy’s been discredited in D.C. and he no longer will be dictating the policy conversation around crypto regulation in Washington.”

But it remains to be seen whether Bankman-Fried’s demise is a healthy “weeding out” of the type he described this summer—or the beginning of a broader unraveling.