Collapsed crypto exchange FTX lent $10 billion of customer funds to its sister firm Alameda Research to help it cover its liabilities, according to a report by New York Times. The NYT interviewed FTX boss Sam Bankman-Fried on Sunday, who talked about the fall of his crypto empire and some of his regrets regarding the company.
FTX Loaned Up to $10B of User Funds to Alameda
Crypto exchange FTX loaned up to $10 billion of user funds to Alameda Research to help it address its liabilities, New York Times reported Sunday, citing people familiar with FTX’s financials. Like FTX, Alameda Research is also founded and owned by Sam Bankman-Fried.
New York Times interviewed SBF and talked to the 30-year-old billionaire about the collapse of his former $32 billion crypto exchange. SBF’s crypto empire collapsed in a matter of days, disrupting the entire crypto industry, and is now facing probes from US regulators.
In the interview, SBF said he was not aware of how big the downside risk was regarding FTX’s relationship with Alameda. He told the NYT that Alameda had accumulated a big “margin position” on FTX, adding it was “substantially larger than I had thought it was.”
Therefore, the “downside risk was very significant,” SBF said. He said the size of the margin position was worth billions of dollars but refused to provide an exact figure.
SBF also talked about FTX’s investment and acquisition spree in 2022, which was “probably not really worth it given the attention it took,” he added. FTX invested in multiple other companies recently, provided funding to political campaigns, and even offered Elon Musk billions of dollars to help him fund his Twitter acquisition.
Executives Were Aware of FTX User Funds Misappropriation
The NYT report also mentions a video meeting with Alameda CEO Caroline Ellison and other Alameda employees. In the meeting, first reported by the Wall Street Journal, Ellison said that she, SBF, and two other FTX executives were the ones that knew about the decision to send user funds to Alameda.
“Ms. Ellison said on the call that FTX used customer money to help Alameda meet its liabilities, the people said.”
This article originally appeared on The Tokenist
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