AI investment ensures FTX customers get their money back

The former customers of FTX, the famous crypto platform went bankrupt in 2022, are apparently getting their money back in full with some interest added on top. One of the reasons for this good news is an early AI investment by Sam Bankman-Fried that ultimately proved very profitable.

In fact, Sam was such a good ‘stockpicker’ that court documents in the US Bankruptcy Court of Delaware this month showed that FTX has by now secured between $14.5 billion and $16.3 billion to repay creditors and former customers. This comes at a time when everyone thought there was a $10 billion gap. How could we get it so wrong?

Crypto winter

FTX’s demise in November 2022 coincided with the bottom of the last so-called ‘crypto winter’. The price of Bitcoin hovered around $15,500 and therefore it was determined that FTX had a debt of $8 to $10 billion.

Hence, FTX customers thought they would eventually get $15,500 for every Bitcoin they had in their account in 2022. In the end, it turned out to be much more.

There are several reasons for this. First, Sam was an early investor in Solana, and when it turned out that that currency was not part of the debt pit, Solana’s price started rising again. The investment by Sam, who had used FTX customer funds to buy Solana at a price between $4 and $15, turned out to be a masterstroke (even though the action he undertook at the time was illegal).

Anthropic

Secondly, Sam was afraid that AI would one day pose a danger to humanity. That’s why he decided to invest part of the FTX funds in AI companies that promised to do good for humanity (sounds quite silly, but ok). One of those companies was Anthropic, back then a small AI startup.

Two years later, two thirds of those Anthropic shares of FTX were sold, again for a significant profit. An initial investment of about $100 million was sold for $884 million in March.

So don’t think that the lawyers who handled the bankruptcy had anything to do with it. Sam was actually a fantastic ‘stock picker’. However, someone should have explained to him in 2021 already that he should have kept his accounts in order.