Former CEO of FTX, Sam Bankman-Fried, Was Concerned About Alameda and Binance
In the weeks leading up to the collapse of crypto exchange FTX, former CEO Sam Bankman-Fried was dealing with various concerns. According to personal notes from former Alameda Research CEO Caroline Ellison, Bankman-Fried was worried about Alameda, invested in Snapchat shares, sought funding from Saudi royalty, and wanted regulators to crack down on rival exchange Binance.
During her testimony in New York, Ellison revealed that Bankman-Fried considered shutting down Alameda and raising $1 billion in capital from the Saudi Prince after a crash in the Terra ecosystem. She also mentioned his plan to get regulators involved with Binance to increase FTX’s market share.
Bankman-Fried’s Other Priorities
In addition to his concerns about Alameda and Binance, Bankman-Fried was seeking more funds from crypto lender BlockFi, trading Japanese government bonds, and investing in Snap Inc stocks. His note also mentioned someone named Willie, possibly referring to his mentor William MacAskill.
Alameda’s Troubles and Financial Issues
Ellison admitted that Alameda could have dealt with the crypto winter better with a stronger hedge strategy. However, she highlighted that the company faced challenges due to large open-term loans and spending billions from its line of credit with FTX. In June, lenders like Genesis Capital enforced their call option, leading Alameda to repay millions of dollars. Under Bankman-Fried’s guidance, Ellison repaid some debts using funds from FTX customers.
In addition, at Bankman-Fried’s request, Ellison created “alternative” spreadsheets for lenders to hide financial liabilities with FTX and prevent full repayment demands. The mounting liabilities with FTX reached $13.7 billion in September 2022, while open-term loans stood at $1.3 billion.
Emotional Distress and Cross-Examination
During the trial, Ellison expressed her anxiety about customers withdrawing funds from FTX amid the “liquidity crush” at Alameda. She revealed her constant worry about loans being called simultaneously.
Bankman-Fried’s defense will cross-examine Ellison on October 12.
Hot Take: Sam Bankman-Fried’s Concerns and Actions Revealed During Trial
The ongoing trial of former CEO Sam Bankman-Fried has shed light on his concerns and actions leading up to the collapse of FTX. Bankman-Fried was reportedly worried about Alameda, sought funding from Saudi royalty, invested in other ventures like Snapchat and Snap Inc stocks, and wanted regulators to crack down on rival exchange Binance. The trial also exposed Alameda’s financial issues, including large open-term loans and hidden liabilities with FTX. Caroline Ellison’s testimony revealed her anxiety about customer withdrawals and the pressure she faced. As the trial continues, more details are expected to emerge about Bankman-Fried’s role in the downfall of FTX.
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