The FTX saga has spread chaos across the market following the exchange’s withdrawal blockage and bankruptcy filing. In addition to FTX, the rest of the companies additionally submitted bankruptcy filings because of the significant losses experienced. During the bankruptcy process of FTX, the market realized that the company did not possess an adequate structure for its operational management. The FTX cofounder, Sam Bankman-Fried has negated several times about his involvement in any fraud with customers.
Alameda Research Reportedly Saved FTX from a Crash Back in 2021
Looking at this, the prominent players in the industry asserted that the downfall took place because of the faulty management of the firm. Sam Bankman-Fried (SBF), the former CEO and founder of FTX, additionally used the assets of the clients without informing them. However, the matter became exciting as SBF consistently attempted to shield Alameda Research over the issues of FTX. Even in advance of the bankruptcy filing of FTX, Alameda withdrew a cumulative amount of $204M to prevent a collapse.
FTX founder refuted collaboration between the two companies but the new reports disclosed that they have a close synchronization. The inquiries have brought to the front that, once in 2021, FTX’s loss of $1B was covered by Alameda. Particularly, the losses were experienced because of a consumer’s leveraged trade. Unluckily, the FTX supporters remained unsuccessful in coping with the respective losses. MobileCoin was the obscure token that witnessed a huge price upsurge but could not maintain it. Consequently, FTX lost millions and Alameda came in.
As the last resort, Alameda rescued FTX, showing that the sister company would be there to meet the funds' shortage. On the other hand, Sam Bankman-Fried stated that he can just speculate what was done with the billions' worth of consumer funds that were wired by FTX to Alameda Research. At present, the regulators are scrutinizing FTX over its management of consumer funds and its financial connection with Alameda.
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SBF Says He Does Not Know about $1B Client Funds Transacted to Alameda
On the 11th of the previous month, only a couple of days following the bankruptcy filing by up to one hundred firms associated with FTX, Reuters reported shocking news. It pointed out that an amount of approximately $1B in consumer funds had disappeared from the firm. As per the report, the client funds of billions worth were transacted to Alameda. SBF elaborated that during 2019-2020 FTX supported several crypto wallets but not the bank accounts for fiat currency’s onboarding.
Bankman-Fried mentioned that it is a possibility that a few of them would have wired funds to the sister company and then requested credit on the FTX-based accounts thereof. As per his anticipation, above 50% of the cumulative position of Alameda came via the respective wired consumer funds to the bank accounts thereof, equaling up to $5B. According to SBF, he had no idea of the ultimate expenditure of the respective funds.
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