Sam Bankman-Fried (SBF) has released a written statement detailing his account of FTX and Alameda Research’s collapse, including approximations of each firm’s financials before it took place.
The former CEO maintains that FTX could have made customers “substantially whole” within a few weeks, had he not been pressured to file for bankruptcy.
The Pre-Mortem
The document, titled “FTX Pre-Mortem Overview,” began by pinning Alameda’s collapse on three causes. These included a large and mostly illiquid asset pile, a failure to hedge its exposure during the bear market, and Binance CEO Changpeng Zhao (CZ)’s tweet in early November.
Specifically, in early 2022, Bankman-Fried believes Alameda held roughly $100 billion in net asset value – only 7% of which was considered “liquid.” By November 10th, however, the firm had just $11 billion in assets left – only $3 billion of which were “liquid” – and a NAV of $0.
This triggered a wave of contagion comparable to the collapse of Three Arrows Capital in June – much of which as felt by FTX due to Alameda’s large margin position on the platform. Nevertheless, Bankman-Fried claimed that FTX still held $8 billion in assets of “varying liquidity” before he stepped down as its CEO.
Furthermore, another $4 billion in potential support had reportedly been tabled by other groups in the form of signed letters of intent (LOIs) – though he believes these pathways have been abandoned by FTX’s new leadership.
“Even now, I believe that if FTX International were to reboot, there would be a real possibility of customers being made substantially whole,” he said.
Accusations of Fraud
Bankman-Fried has been widely accused of committing fraud and theft together with Alameda Research by comingling user assets at FTX with Alameda’s trading funds. FTX’s new CEO, John Ray, testified as much to Congress in December, while MicroStrategy’s executive chairman Michael Saylor has claimed the same on multiple podcasts.
Bankman-Fried denies any such claims, however. “I didn’t steal funds, and I certainly didn’t stash billions away,” he said.
By 2022, Alameda counted for about 2% of trading volume on FTX, which was far lower than in previous years.
According to Bankman-Fried, Alameda would have survived passed November if not for CZ and Binance’s “extremely effective months-long PR campaign against FTX.”
Alameda CEO Caroline Ellison and FTX co-founder Gary Wang have each pled guilty to defrauding FTX’s investors in collaboration with Bankman-Fried.
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