Al-anwar Newspaper English news in Australia
Former chief executive of cryptocurrency exchange FTX Sam Bankman-Fried appears to be slowly writing the phrase “what happened” on Twitter, letter by letter.
The world is asking the same thing after his companies, worth $47.77 billion (US$32 billion) at their peak, spectacularly collapsed on Friday.
Hailed as a genius, the 30-year-old from California watched as his net worth plunged from $23 billion ($US16 billion) to zero on Tuesday. By Friday, his companies FTX and Alameda (along with 130 affiliated companies) had filed for bankruptcy protection. He later admitted he “f***ed up”. Mr Bankman-Fried, known as SBF, is reportedly “under supervision” by Bahamian authorities, where FTX was based.
SBF is now being widely ridiculed and loathed on social media and his longrunning feud with Binance CEO Changpeng Zhao, known as CZ, is turning nasty.
Something rotten at FTX
CZ and SBF had been sniping at each other on social media for months before the collapse of FTX.
There were rumours something was rotten at FTX.
In early November, an article published by CoinDesk suggested that Alameda’s balance sheet was packed full of FTX’s FTT token. Then on November 7, CZ announced Binance was dumping its FTT holdings. He cited “recent revelations that have come to light” and said it was not a “move against a competitor”.
At first SBF claimed FTX’s finances were sound.
“FTX has enough to cover all client holdings,” he wrote in a tweet that has since been deleted.
But soon, many more investors wanted to pull their funds out of FTX. A trickle became a flood and FTX didn’t have enough money on hand, it was gripped by a liquidity crisis.
SBF swallowed his pride and called CZ. He begged his fellow crypto mogul to rescue FTX. CZ agreed but with a proviso, due diligence would need to take place.
But the rescue deal collapsed as revelations came to light that FTX was under investigation by US regulators.
SBF had allegedly transferred at $14 billion ($US10 billion) in funds to prop up FTX’s ailing sister company Alameda Research. And about $1.5 billion to $3 billion ($US1 to 2 billion) of customer funds have vanished from the crypto exchange
The transfers were not publicly disclosed and Alameda had allegedly been using FTX customer money for trades.
SBF told Reuters he “disagreed with the characterisation” of the transfers.
“We didn’t secretly transfer,” he said via a text message. “We had confusing internal labelling and misread it.”
When asked specifically about the missing funds SBF wrote: “???”
‘Liars or fraud’
SBF announced on November 12 that his companies had filed for Chapter 11 bankruptcy protection and since then CZ has been stinging in his criticism.
Yesterday CZ announced Binance was forming an industry recovery fund to “help projects who are otherwise strong, but in a liquidity crisis”.
Asked about FTX in relation to the scheme, CZ responded, “Liars or fraud never qualify as strong projects.”
