The collapse of $32 billion cryptocurrency exchange FTX, like other scandal-ridden corporate failures, has yanked a once-celebrated executive into the harsh light of public scrutiny.
Sam Bankman-Fried, the 30-year-old founder of FTX, was arrested Monday in the Bahamas after federal prosecutors in New York filed an eight-count indictment including allegations of fraud and conspiracy, against the executive, according to the Royal Bahamas Police Force.
Bankman-Fried had quickly ascended to the top of the cryptocurrency sector, garnering goodwill in recent years as a philanthropist and leading proponent of industry regulation. The cover of Fortune Magazine in August asked readers whether Bankman-Fried, known by some as "SBF," was "the next Warren Buffett."
Lately, however, he faced withering questions over the mismanagement of billions in customer funds. Meanwhile, his net worth plummeted from $16 billion to $0 in less than a week, according to an estimate from Bloomberg.
Concerns of financial instability at FTX -- a top platform where users buy and sell crypto -- triggered a wave of customer withdrawals totaling billions of dollars. But FTX lacked sufficient funds to pay sellers, instead imposing a halt on withdrawals altogether. Some crypto traders, who deposited their savings on the platform, fear they may never get their money back.
Days later, the company declared bankruptcy and Bankman-Fried resigned as CEO. He now faces criminal charges as well as civil charges from the U.S. Securities and Exchange Commission. FTX and Bankman-Fried did not immediately respond to a request for comment.
Here's what you need to know about Bankman-Fried:
The rise of FTX and Bankman-Fried
FTX, an exchange that allows users to buy and sell cryptocurrency, generated revenue by charging customers trading fees and selling an FTX-created crypto token that allowed users to buy and sell on the platform at a discount.
Customers flocked to the exchange for low trading fees, the variety of coins on offer, and the complex futures and options trades available. In its early years, which coincided with a crypto boom as pandemic-related stimulus drove cash into the sector, FTX added hundreds of thousands of users and some major investors.
In 2021, the company moved to the Bahamas, seeking a favorable regulatory environment.
By July of that year, a $900 million funding round put the value of the company at $18 billion. A few months later, the valuation jumped to $25 billion. Finally, in January, the company saw its value soar to a peak of $32 billion.
The success sent Bankman-Fried's wealth and notoriety soaring.
"FTX's collapse highlights the very real risks that unregistered crypto asset trading platforms can pose for investors and customers alike," said Gurbir S. Grewal, director of the SEC's Division of Enforcement, in a statement.
ABC News' Aaron Katersky and Melissa Gaffney contributed to this report.