Billion dollars of FTX customers vanished while sent to Sam Bankman-Fried’s trading firm, Alameda Research. Yet he insists he cannot explain what happened to this sum. He said he couldn’t exclude the possibility that FTX users’ money was loaned to Alameda, even though they had been told it was theirs alone. Mr. Bankman-Fried spoke with The Wall Street Journal in an interview. Despite owning 90% of the company, he said he had stepped back from managing it and had little understanding of its processes.
Several FTX consumers wired money to Alameda-registered bank accounts to pay for their FTX accounts. Regrettably, this was not the case. FTX didn’t have its bank account when the exchange was first founded, so that’s a legacy from those early days, Bankman-Fried explained. According to him, FTX customers have deposited more than $5 billion in Alameda accounts. Those funds are no longer available.
According to Bankman-Fried, the funds of FTX customers might have been recorded in two places, as FTX customer funds and as part of Alameda’s trading positions. With assets that weren’t there, such double-counting would have resulted in a massive hole in FTX’s and Alameda’s balance sheets. Alameda’s liabilities may not have been completely captured. However, he denied that double-counting impacted FTX’s financials.
Sam Bankman-Fried Says that He Was Too Distracted by Other Projects to Be on Top of Alameda Trades
FTX was one of the largest cryptocurrency exchanges in the world, with a 30-year-old CEO. Bankman-Fried was quite a well-known figure in the crypto space. FTX was funded by crypto enthusiasts from all around the globe who wanted to buy and sell digital assets. Alameda also participated in FTX as a buyer and seller.
When a wave of customer withdrawals could not be satisfied, FTX filed for bankruptcy on November 11th. Alameda is also bankrupt, having made a series of terrible, oversize deals.
The bankruptcy case revolves around the whereabouts of the missing billions, but getting to the bottom will be tough. The new CEO stated that FTX’s financial reporting is untrustworthy. According to him, Bankman-Fried and his colleagues used software to conceal the misuse of customer funds.
Due to flawed internal systems, Bankman-Fried said he was unaware of the magnitude of Alameda’s FTX trades. According to him, the large size and riskiness of Alameda’s trades were hidden by a dashboard. The FTX administrators utilized this dashboard to monitor big traders’ bets. He insists he was too swamped with FTX CEO concerns and preoccupied with other projects. Hence, he was less attentive to Alameda.
