The revelations on the FTX affair follow one another and are not alike. Sam Bankman-Fried, the company’s ex-CEO revealed this weekend that the company allegedly sold fictitious funds to its clients. A heavy revelation, which adds to an already long list.
FTX was selling fictitious assets to its clients
Sam Bankman-Fried spoke to Ran Neuner, the creator of the Crypto Banter podcast. He occasionally explained some operating points of FTX, including how clients could purchase funds. And what stands out is that the exchange was selling assets it did not own to its customers.
FTX did not yet have a partner in the banking sector in 2019 and 2020. Clients therefore deposited funds in the bank accounts of Sam Bankman-Fried’s other company: Alameda Research. They then received their assets in their accounts, but without the funds used to pay are owned by FTX. What this means is that FTX was selling assets not represented by money actually owned by it.
🔴 Archive – Our live on the fall of FTX in real time
Ran Neuner pointed out that this is partly the reason for the rapid collapse of the platform:
“This would explain why Alameda [Research] had so much money to invest in projects. […] You were just letting us buy imaginary tokens that didn’t actually exist. This is the reason why there were no more bitcoins to withdrawbecause these bitcoins did not actually exist.»
A fact that Sam Bankman-Fried readily admits in response:
“I think what you are saying is, in fact, part of what happened.»
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Decidedly very murky links between FTX and Alameda Research
As a reminder, we have learned in recent weeks that Alameda Research had previously siphoned funds from FTX clients, in order to bail out. It is therefore another murky link between the two companies that has just been revealed. If we summarize what we know about the functioning of these two entities, we see the extent of the faults committed:
- Alameda Research did not have sufficient funds
- FTX would therefore have surreptitiously sent funds held by customers to the company to bail it out.
- In parallel, Alameda Research would have been the custodian of FTX client funds in 2019 and 2020
- Over this period at least, FTX was therefore selling fictitious assets to its clients
The candor of Sam Bankman-Fried may surprise: the man seems to chain the revelations as the interviews progress. Against the advice of his lawyers, he reveals here and there particularly striking information on the inner workings of what was until recently his empire. What to fuel a future trial? FTX customers hope so, but for now the ex-CEO seems oddly untouchable.
👉 On the same subject – The Russo brothers (Avengers, Captain America) will produce a miniseries on Sam Bankman-Fried and FTX
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Source: Mario Newfal via Twitter – Illustration: CoinTelegraph via Wikimedia Commons (CC BY 3.0)
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Journalist at Cryptoast, I fell into the pot of cryptocurrencies a few years ago. I am passionate about the innovative technologies that stem from the blockchain and I like to find the most crispy information to share with you.
Marine Debelloir
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