Sam Bankman-Fried cofounded FTX in 2019 and is its CEO. Photo FTX
Sam Bankman-Fried’s now bankrupt crypto company FTX has reportedly recovered over $7.3 billion in cash and liquid crypto assets. According to Reuters this constitutes an $800 million increase in the amount of recovered assets since January. As Andy Dietderich, the company’s attorney, so eloquently put it, “The situation has stabilized, and the dumpster fire is out.”
FTX’s new chief executive John J. Ray III, said in a report that the company’s collapse resulted from, “hubris, incompetence and greed.”
According to the Wall Street Journal, 56 entities within the FTX Group did not provide financial statements at all, according to the report. And in addition to that 35 entities used accounting platform QuickBooks, and “relied on a hodgepodge of Google documents, Slack communications, shared drives, and Excel spreadsheets and other non-enterprise solutions to manage their assets and liabilities.”
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FTX’s sister-trading firm Alameda Research also had poor record keeping. In an internal communication, Mr. Bankman-Fried called Alameda “unauditable,” saying “we sometimes find $50m of assets lying around that we lost track of; such is life.”
Sam Bankman-Fried stands accused of eight counts of fraud and conspiracy. If convicted on all counts, he could be sentenced to as much as 115 years in jail. The charges came after his FTX crypto currency exchange company went bust a few weeks ago. The big question over the fall of FTX is “what happened to all of the money that people left with the company?” FTX was a crypto bank, so to speak, a place where people could park their virtual assets. But unlike with banks, there is no regulation over the handling of cryptos and FTX is said to have moved people’s cryptos around, basically that the company spent their money.
Based in the Bahamas, FTX was a cryptocurrency exchange that said it was built by traders, for traders. FTX offers industry-first derivatives, options, volatility products and leveraged tokens. FTX had more than one million traders using its services when it failed.
When FTZ crashed, Sam Bankman-Fried himself lost 94% of his total wealth, or about $14.6 billion and was forced to sell whatever was left of FTX to chief rival Binance.
FTX, it seems, was nothing more than a house of cards built upon its own assets. The company’s net worth was based on ownership of its own tokens. This means that FTX claimed to be wealthy because it owned the same crypto tokens the company issued. And these tokens had no tangible net worth.
