FTX founder Sam Bankman-Fried, the now-former CEO of the platform and its associated companies, was facing an $8 billion shortfall, The Wall Street Journal reported.

However, some have been drawing such comparisons, including Galaxy Digital
BRPHF,
-10.00%
CEO Mike Novogratz in an interview with CNBC: “You know, we basically have a situation that looks like Theranos,” he said on the business network on Thursday.

“I’m furious,” Novogratz said, referring to how FTX’s capsizing hurts confidence in the nascent crypto market, with bitcoin
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+0.71%,
the progenitor of the current crypto, forming in the wake of the 2008-2009 financial crisis.

Theranos founder Elizabeth Holmes rose to prominence on the back of the belief that she had invented groundbreaking advancements in blood-testing technology. The company’s valuation grew to $9 billion as she attracted a wave of high-profile investors, including Draper, before it was uncovered that no such technology existed. She was convicted of fraud in January 2022.

For his part, Bankman-Fried, 30, announced his resignation from his position as the head of FTX on Friday. The SEC and DOJ are investigating FTX’s recent implosion, though at this point Bankman-Fried is not in any legal trouble.

The collapse comes as some had come to regard Bankman-Fried as a sort of savior to other beleaguered crypto firms earlier this year. SBF, as he’s sometimes known, was a member of MarketWatch’s list of the 50 most influential people.

Like Holmes, he was heralded as a phenom, appearing on the August/September cover of Fortune magazine as the “next Warren Buffett,” the legendary value investor.

The velocity of his downturn has also been stunning. His net worth had been estimated to be $15.6 billion before this week, according to the Bloomberg Billionaires Index. But now the vast majority of his fortune has been wiped out, Bloomberg said.

According to WSJ, some $2 billion was poured into the three-year-old FTX with little oversight or sufficient scrutiny into its business.

The exchange lent billions of dollars to fund risky bets at its affiliated trading firm, Alameda Research, using money that customers had deposited at FTX, according to reports.

A spokesman for FTX declined to comment.

“This is about people who got ahead of their skis.” Draper said. He added, “I feel for those who got caught up in this mess.”

The venture capitalist and crypto enthusiast said he, for one, has never viewed SBF as the golden boy of crypto and has been broadly skeptical of platforms that don’t offer clear transparency regarding their holdings.

“I’ve been very cautious with DeFi [decentralized finance] and have avoided most of those,” said Draper, who is an investor in trading platforms Coinbase Global Inc.
COIN,
+12.84%
and Ledger.

“You’re better with good solid management, good solid performance,” Draper said.

“I tend not to follow the hype,” he added.

For the most part, cryptocurrencies, including Ether
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+1.03%
and bitcoin, have been swooning as the FTX drama has unfolded. The stock market briefly jolted lower on Tuesday, with the Dow Jones Industrial Average
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+0.10%
shedding more than 600 points on Tuesday, before the broader market — including the S&P 500
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+0.92%
— bounded back on Thursday, boasting a tremendous 1,200-point rally.

Further FTX reading:

• You need to understand the FTX debacle even if you have no investments in crypto

• FTX filed for Chapter 11 bankruptcy. Here’s what account holders should know about this ‘very messy and complex bankruptcy case’

• Crypto lender BlockFi pauses withdrawals in wake of FTX’s collapse

• The $26 billion rise and fall of FTX crypto king Sam Bankman-Fried