SBF Breaks Silence Throughout Dwelling Arrest; Provides Particulars on FTX (In)solvency

Sam Bankman-Fried (SBF) has launched a written assertion detailing his account of FTX and Alameda Analysis’s collapse, together with approximations of every agency’s financials earlier than it befell. 

The previous CEO maintains that FTX may have made clients “considerably complete” inside a couple of weeks, had he not been pressured to file for chapter. 

The Pre-Mortem

The doc, titled “FTX Pre-Mortem Overview,” started by pinning Alameda’s collapse on three causes. These included a big and largely illiquid asset pile, a failure to hedge its publicity in the course of the bear market, and Binance CEO Changpeng Zhao (CZ)’s tweet in early November. 

Particularly, in early 2022, Bankman-Fried believes Alameda held roughly $100 billion in internet asset worth – solely 7% of which was thought-about “liquid.” By November tenth, nonetheless, the agency had simply $11 billion in property left – solely $3 billion of which have been “liquid” – and a NAV of $0. 

This triggered a wave of contagion akin to the collapse of Three Arrows Capital in June – a lot of which as felt by FTX because of Alameda’s giant margin place on the platform. Nonetheless, Bankman-Fried claimed that FTX nonetheless held $8 billion in property of “various liquidity” earlier than he stepped down as its CEO. 

Moreover, one other $4 billion in potential assist had reportedly been tabled by different teams within the type of signed letters of intent (LOIs) – although he believes these pathways have been deserted by FTX’s new management.

“Even now, I imagine that if FTX Worldwide have been to reboot, there can be an actual chance of shoppers being made considerably complete,” he stated. 

Accusations of Fraud

Bankman-Fried has been broadly accused of committing fraud and theft along with Alameda Analysis by comingling consumer property at FTX with Alameda’s buying and selling funds. FTX’s new CEO, John Ray, testified as a lot to Congress in December, whereas MicroStrategy’s govt chairman Michael Saylor has claimed the identical on a number of podcasts. 

Bankman-Fried denies any such claims, nonetheless. “I didn’t steal funds, and I actually didn’t stash billions away,” he stated.  

By 2022, Alameda counted for about 2% of buying and selling quantity on FTX, which was far decrease than in earlier years. 

In keeping with Bankman-Fried, Alameda would have survived handed November if not for CZ and Binance’s “extraordinarily efficient months-long PR marketing campaign in opposition to FTX.”

Alameda CEO Caroline Ellison and FTX co-founder Gary Wang have every pled responsible to defrauding FTX’s traders in collaboration with Bankman-Fried.