The Fall of FTX: Bankman-Fried’s Private Documents Reveal Blame Game
While Sam Bankman-Fried was under house arrest, he shared confidential documents with journalist Tiffany Fong, who then leaked some of the materials to The New York Times. In an unpublished thread, Bankman-Fried expressed that he did what he believed was right but couldn’t change the public’s perception of him. He chose Fong as an independent reporter who doesn’t have any affiliations.
Blaming Caroline Ellison and Alameda Research
According to The Times’ report, Bankman-Fried places a significant amount of blame on his former lover, Caroline Ellison, for the downfall of FTX. He claimed that she was unfit to run Alameda Research and even cried during a meeting with him. In a document titled “Alameda’s Failure to Hedge,” Bankman-Fried criticized Ellison for avoiding discussions on risk management and disregarding his suggestions.
Sam Trabucco and Other Factors
Bankman-Fried also criticized Alameda’s former CEO, Sam Trabucco. He mentioned that Trabucco was quietly quitting in 2021 and accused him of dating multiple individuals while sailing around the world. Additionally, Bankman-Fried made a passing reference to Binance’s Changpeng Zhao (CZ) in a note from 2019. However, the majority of the blame seems to center around Alameda’s hedging strategies. Bankman-Fried firmly believes that if Alameda had properly hedged its positions, the collapse could have been prevented.
The Significance of Proper Hedging
Bankman-Fried emphasized that if Alameda had implemented effective hedging techniques, it would have remained financially stable and avoided the entire unfortunate incident. Proper risk management and hedging strategies are crucial in preventing such catastrophic outcomes.
Hot Take: Unveiling the Internal Struggles of FTX
The leaked documents from Sam Bankman-Fried’s private collection shed light on the internal conflicts and finger-pointing within FTX. While Bankman-Fried blames his former lover and Alameda Research for the collapse, it is evident that proper risk management and hedging techniques played a significant role. This serves as a reminder of the importance of sound financial practices in the volatile world of cryptocurrencies.
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