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Sam Bankman-Fried Explains FTX-Alameda Relationship
Former FTX CEO Sam Bankman-Fried is under scrutiny by prosecutors over the relationship between crypto exchange FTX and trading firm Alameda Research. SBF has reportedly made customers wire transfer money to FTX through Alameda bank accounts at Silvergate and other banks.
During the interview with the New York Times, SBF defended himself from fraud accusations. Also, get completely sidelined himself from Alameda, saying “I wasn’t running Alameda.”
Sam Bankman-Fried Denies Oversight of Alameda
SBF pointed out that he was not aware of the relationship between FTX and Alameda Research, nor the sizable amount of funds transferred between FTX and Alameda.
Alameda had nearly 10% leverage a year ago. However, the number of market crashes drove the value of those assets down and the leverage up. Sam Bankman-Fried said more than $10 million was “wiped off in a matter of days,” leaving FTX unable to liquidate that position and generate the money owed.
Commenting on the commingling of funds, SBF said “I didn’t knowingly commingle funds.” However, he agreed with big positions at Alameda, which was another failure of oversight on his part. Moreover, he believes Alameda has margin positions with crypto borrowing and lending firms. Alameda moved those positions to FTX after the crypto lending firms collapsed due to liquidity issues.
SBF denied knowing what was happening between FTX and Alameda until last month. He cited conflict of interest reasons for not having a part in operations, finances, and decision-making at Alameda.
Commenting on missing funds and FTX and FTX US wallets exploit, he admitted the transfer of some funds by FTX’s U.S. team to custody wallet and another portion taken by Bahamian regulators. Moreover, he agreed that FTX has been hacked with funds siphoned off by unknown individuals.
How FTT Token Become a Key Part of the Relationship
FTX Token (FTT) allowed customers to use it and trade their crypto assets on the crypto exchange. Alameda was the main market maker of FTT tokens, buying and selling a majority of FTT. In fact, FTX offered trading discounts for using FTT.
Alameda began using its FTT holdings as collateral for more loans from crypto lenders to facilitate its trading activities. Larry Fink, CEO of BlackRock, also believes FTT tokens as the reason behind the collapse of FTX.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
