Disgraced FTX founder Sam Bankman-Fried says the pinnacle of rival trade Binance contributed to setting off the demise of his crypto empire.
In a submit to Bankman-Fried’s Substack titled “FTX Pre-Mortem Overview,” the 30-year-old says a mix of a number of components induced the collapse of the Bahamas-based FTX trade.
These components embody the mismanagement of sister buying and selling agency Alameda Analysis, the crypto bear market and a deliberate transfer by Binance CEO Changpeng “CZ” Zhao.
“Three issues mixed collectively to trigger the implosion:
a) Over the course of 2021, Alameda’s stability sheet grew to roughly $100 billion of Internet Asset Worth, $8 billion of internet borrowing (leverage), and $7 billion of liquidity available.
b) Alameda did not sufficiently hedge its market publicity. Over the course of 2022, a collection of huge broad market crashes got here–in shares and in crypto–resulting in a ~80% lower available in the market worth of its property.
c) In November 2022, an excessive, fast, focused crash precipitated by the CEO of Binance made Alameda bancrupt.”
He says Alameda managed to carry up regardless of the collection of crashes within the crypto market however not till Zhao introduced on Twitter that Binance will promote $580 million value of FTX Tokens (FTT).
“Then got here CZ’s fateful tweet, following an especially efficient months-long PR marketing campaign in opposition to FTX–and the crash.
The November crash was a focused assault on property held by Alameda, not a broad market transfer.”
Bankman-Fried, who’s underneath home arrest following his eight-count indictment final month, additionally denies that he misappropriated FTX buyer funds. He says he’s prepared to have his private property used to pay clients.
“I didn’t steal funds, and I actually didn’t stash billions away. Almost all of my property had been and nonetheless are utilizable to backstop FTX clients. I’ve, as an example, supplied to contribute practically all of my private shares in Robinhood to clients–or 100%, if the Chapter 11 workforce would honor my D&O [Directors and Officers] authorized expense indemnification.”
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