Sam Bankman Fried’s interviews are bringing to light specific events about the collapse of his FTX platform.
In one of the most recent ones, SBF shifted focus to Alameda Research, his other company headed by Caroline Ellison.
Bankman Fried in the interview tends to specify that he was not running Alameda and did not know the size of their position. This week, an anonymous FTX insider shared a document showing Alameda Research CEO Caroline Ellison‘s personal account with a $1.31 billion hole in May 2022.
FTX’s margin position got out of control.
There is a lot of information shared by Sam Bankman Fried about FTX’s accounting and fund management positions. During SBF’s most recent interview with Frank Chaparro of The Block, the former FTX CEO said regulators and auditors saw no financial hole because client positions and Alameda Research positions were not included in FTX’s financial data.
SBF said the auditors looked at some aspects, but they were not looking at client positions and not looking at client risk.
SBF said that wired client funds contributed to more than half of Alameda’s position on FTX, probably totaling more than $5 billion, the Wall Street Journal reported.
In hindsight, SBF says that a “reasonably responsible” way to handle direct transfers would have been just debiting Alameda’s main FTX account. In practice, funds from wired customers were credited from an Alameda stub account that SBF says “was specifically designed to be a ledger for wire transfers.” When pressed on how regulators and auditors failed to discover the extent of Alameda’s relationship with FTX, SBF said that customer positions (including Alameda’s) were not part of FTX’s balance sheet.
During the interview, Sam Bankman Fried explained:
“In many ways, frankly. In terms of letting a margin position get too big, bigger than I thought. And not being thorough enough to capture it. We should not have allowed a margin position to get that big. It was too big. And it was too big, given the liquidity of the collateral.”
In another statement, SBF explained that Alameda’s margin position was so large that it would not have been liquidly bridged to meet its obligations.
“This moved it from a somewhat risky position to a position that was too large to be manageable during a liquidity crisis and that would seriously jeopardize the ability to provide funds to clients.”
Related to Caroline Ellison and her $1.3 billion hole, there are still many unanswered questions about the matter.
The insider who shared the document allegedly linked to Ellison asked:
“How can a friend of SBF generate a debt of that size without collateral?”
Many dubious questions are coming back to Ellison and people have been investigating the Alameda CEO for quite some time. Ellison was reportedly spotted in New York last weekend.
The document displayed by our newsdesk shows the user’s negative balance due or held in a margin position.
A huge amount of FTT, MegaSerum (MSRM), locked MegaSerum (MSRM), locked Serum (SRM), locked Maps (MAPS), Solana (SOL), Ethereum (ETH), Bitcoin (BTC), and millions of dollars of stablecoin can be seen. The user balance, presumably related to Alameda CEO Ellison, shows that almost all accounts are in the negative by about $1.31 billion.