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FTX Wreck Still On Fire: “It’s Stolen Customer Money … Plain And Simple”

Sam Bankman-Fried has gone on a damage-control tour as the impact if his collapsed FTX Group crypto empire mushrooms. Against the advice of his lawyers, the former CEO spoke with the New York Times and ABC’s “Good Morning America” last week in his first public interviews since FTX filed for bankruptcy on Nov. 11. A rising number of industry experts say it’s time to stop listening to Bankman-Fried.


In the interviews, Bankman-Fried repeatedly apologized while denying that he intentionally commingled client funds. He said it essentially came down to massive mismanagement, miscalculating leverage and funds made commonly available between FTX, Alameda and the related entities.

“I made a lot of mistakes or things I would give anything to be able to do over again,” SBF said at the DealBook Summit on Wednesday. “I didn’t ever try to commit fraud on anyone.”

FTX says SBF has no ongoing role at FTX or its entities and does not speak on their behalf. Cryptocurrency experts are increasingly done with Bankman-Fried’s excuses.

“I don’t care how messy your accounting is (or how rich you are) — you’re definitely going to notice if you find an extra $8B to spend,” Coinbase (COIN) CEO Brian Armstrong tweeted Saturday night. “Even the most gullible person should not believe Sam’s claim that this was an accounting error. It’s stolen customer money used in his hedge fund, plain and simple.”

According to Wall Street Journal reports, Alameda Research owes FTX $10 billion after taking loans funded by FTX customer deposits. Bankman-Fried claims he didn’t realize how big Alameda’s position was and described it as an “accounting mistake” at DealBook.

However, blockchain data hints at a different story.

Commingled Funds

Blockchain analytics firm Nansen tracked roughly $4 billion worth of FTX’s FTT token being sent to FTX from Alameda between early June and July, during the peak of the Three Arrows Capital collapse this summer.

“This is in line with the interview from Reuters with several people close to Bankman-Fried, revealing a $4 billion loan from FTX to Alameda backed by FTT tokens, Robinhood shares, and other assets,” Nansen wrote in its report. The FTX loan to Alameda occurred in May and the $4 billion Alameda deposit in June could have been the provisional collateral to secure the loans, Nansen suggests.

Those transfers have been confirmed by other firms as well. But Bankman-Fried has yet to address those questions.

“The only facts in the case that I see are on-chain, where CoinDesk and others, and then our team as well, noticed the movement of assets out of and back into the FTX deployer wallet from the Alameda wallet,” says Mark Connors head of research for digital asset manager 3iQ.

“That’s a fact that speaks volumes more than anything that SBF can or has said. And the other data that’s out there is a 30-page bankruptcy filing that gives the initial opinions of (court-appointed CEO) John J Ray III,” Connors said. “Both of those are very damning. And they leave anything that Sam Bankman-Fried has to say, I think, with little actionable value.”

“Our judgment is, driven by the facts, on-chain data, and the FTX bankruptcy document together suggest that this was related-party transactions with client assets going back to at least Q2 of 2022,” Connors said.

Ignore Bankman-Fried

At this point, Bankman-Fried interviews are like “rubbernecking,” according to Connors. “The wreck has happened and all you have is people not helping, but just watching the wreck still on fire.”

There’s nothing that he could say to really help, unless he gives direction to where some assets have flowed, Connors said. “And that should be discreetly shared with the new, court-appointed CEO John J. Ray III. Anything else is a show and I don’t think that we’re helping by supporting that.”

However, the FTX fiasco isn’t indicative of crypto as a whole or where things are heading, Connors says. “The FTX failure is just an echo of the Q2 failures of Voyager Digital and Celsius. It was centralized, unregulated actors.”

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