The collapse of FTX is becoming clearer. Complaints released by the SEC and the Commodities Futures Trading Commission provide the most comprehensive look yet at how Sam Bankman-Fried’s operation came crashing down.
released Wednesday night provide the most comprehensive look yet at how Sam Bankman-Fried’s operation came crashing down.
Though he publicly claimed otherwise, Bankman-Fried was the ultimate authority of Alameda. From the CFTC complaint: “Even after stepping down as CEO of Alameda, Bankman-Fried continued to maintain control over Alameda.” The collateral Alameda held for its loans was mostly FTT, a crypto token FTX made and gave to Alameda, which the hedge fund then tried to prop up. From the SEC complaint:"On more than one occasion, Alameda and Ellison, at Bankman-Fried’s direction, actively engaged in the trading of FTT with the goal of supporting the price of the token."
That cash was used for all sorts of things. From the SEC complaint:"Bankman-Fried then used Alameda as his personal piggy bank to buy luxury condominiums, support political campaigns, and make private investments, among other uses. Ellison used these funds for Alameda’s operations, including speculative trading strategies and servicing Alameda’s debt to third-party lenders."
As the crypto downturn worsened this year, FTX’s leaders began to understand the extent of their issues. From the CFTC complaint:"By approximately mid-2022, FTX’s internal ledgers reflected that the balance of Alameda’s fiat liability to FTX totaled approximately $8 billion, a staggering amount that exceeded FTX total lifetime revenue."
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