Bankman-Fried wanted cryptocurrency prices to go up to plug the FTX Hole

Important takeaway

  • The New York Times revealed that top FTX executives are worried Alameda will use FTX client funds again in 2020.
  • Sam Bankman-Fried has reportedly denied these concerns, saying Alameda’s debt is backed by the Financial Times.
  • Bankman-Fried pressed the issue again in September 2022, saying that rising cryptocurrency prices should help rectify the situation.

Members of Sam Bankman-Fried’s “inner circle” — likely FTX co-founder Gary Wang and FTX CTO Nishad Singh — have issued several warnings to Sam Bankman-Fried about Alameda’s negative balance.

If only prices went up

FTX executives were well aware of the precarious state of the stock exchange before it crashed.

new documents It was received According to the New York Times, two senior FTX executives came to then-CEO Sam Bankman-Fried with concerns about the company’s debt to Alameda Research on several occasions before the stock market crashed.

While both executives were not named in the documents, they were described as “high-level developers working on FTX code.” So it seems likely that they are FTX co-founder Gary Wang and FTX CTO Nishad Singh.

According to The Times, one executive approached Bankman-Fried as far back as 2020 with concerns about Alameda’s negative balance on FTX — the trading company was already “hundreds of millions of dollars” in the red. The manager realized that the situation could only be possible if Alameda improperly used FTX.com clients’ funds. But Bankman-Fried dismissed their concerns, saying “it was OK” because Alameda’s debt was backed by FTX’s FTT token.

Later, in September 2022, after Alameda lost about $5 billion, Bankman-Fried discussed the possibility of closing the business. But top executives have been told that Alameda now owes FTX about $13 billion. Bankman-Fried, who admitted he was also concerned, said that “the situation could correct itself if they raise more stocks and cryptocurrency prices go up.”

Wang and former Alameda CEO Caroline Ellison have already pleaded guilty to multiple fraud charges. Singh has not yet been charged.

Disclaimer: At the time of writing, the author of this piece owns BTC, ETH, and many other crypto assets.

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