The head of the FTX platform, who resigned at the same time his company filed for bankruptcy on Friday, gave an interview to New York Times. The paper also reveals new unpublished information.
For those wondering if Samuel Bankman-Fried (SBF) was the author of the recent strange tweets based on “What” and the letters of the alphabet, the answer is yes. The founder of FTX, who went from a hero to an anti-crypto hero in the span of a few days, gave an interview to New York Times.
As a reminder, the company he founded in 2019 went bankrupt on Friday. Today, FTX is being targeted by the Securities and Exchange Commission (SEC, the US financial police) and the Department of Justice, to find out if there was any conflict of interest between FTX and its trading company Alameda Research.
Two days after his company went bankrupt, SBF gave an interview where he seemed surprisingly calm.
“You would have thought that I would not be sleeping now, and on the contrary, I am sleeping a little,” said SBF. “It could be worse”, adds the latter.
The relationship between FTX and Alameda Research, the origin of SBF’s downfall
“The relationship between Alameda and FTX is the cause of Mr. Bankman-Fried’s downfall,” he points out New York Times. With his trading skills, SBF founded the trading company Alameda Research in 2017. The company, which bets on buying bitcoins in the United States to resell them at a higher price in Japan, quickly earned $20 million. Then, in 2019, with its cryptocurrency experience, SBF decided to launch the FTX cryptocurrency trading platform.
However, while the two entities would remain distinct, New York Times reveals close ties between the two structures, including a former romantic relationship between SBF and Alameda Research chief Caroline Ellison.
“Alameda traded extensively on the FTX platform, which meant it sometimes profited from the losses of other FTX clients, a dynamic that critics have called a conflict of interest. In the past, Mr. Bankman-Fried has defended the ‘arrangement, saying Alameda provided essential liquidity – capital injections that allowed other clients to trade on the exchange (including the FTX trading platform, editor’s note),” we can read.
Everything seems to have changed a few months ago when paradoxically SBF was established as one the “savior” of cryptoecosystems. Indeed, followingterra luna blockchain collapse, the latter had come to the aid of certain companies at risk, from Digital Voyager to BlockFi. It was during this period that the latter dared to declare that some companies were “secretly bankrupt”.
Up to $10 billion in loans
It was said last spring that struggling Alameda Research used funds from FTX clients to make payments. The trading platform has lent up to $10 billion to Alameda. “Alameda had built a ‘large margin position’ in FTX, which basically means it borrowed funds from the cryptocurrency exchange,” Sam Bankman-Fried pointed out.
“It was much more important than I thought,” said the latter, referring to the several billion dollars borrowed without giving an exact amount.
While the Fed called for swift regulation of cryptocurrencies after FTX’s bankruptcy, the SBF explains that it has “worked constructively with regulators, officials to manage (the company’s) liquidation and the company to try to do what’s best for consumers”.
Defended by Paul Weiss attorneys while FTX is represented by law firm Sullivan & Cromwell, SBF rejects the possibility of a prison sentence.
“People can say all the bad things they want about me on the internet,” he said.
“In the end, what will matter to me is what I’ve done and what I can do.” Based in the Bahamas, the latter declined to give its current location for security reasons.