Ilon Musk has claimed that the founder of cryptocurrency exchange FTX did not fund the purchase of Twitter. What happened?
At the end of October, Tesla CEO Elon Musk acquired Twitter, a deal that cost around $44 billion to buy the company. Some of that money was raised from outside investors, one of which was the cryptocurrency exchange Binance. That said, there were rumours online even before FTX’s recent bankruptcy that its now former CEO Sam Bunkman-Fried had also given Ilon at least $100 million. However, Musk has now denied this information.
Note that Bankman-Fried’s actions have led to serious problems for the blockchain industry. However, many cryptocurrency users recommend separating the FTX founder’s activity from the essence of decentralised platforms and digital assets in general. In particular, Congressman and Minnesota Representative Tom Emmer expressed such a view the previous day. He said that the collapse was a case of the centralised finance industry, not blockchain and decentralised assets.
Cryptocurrency market collapse
A similar argument was voiced by analysts at JP Morgan. They noted that the malfunction for the coin niche was caused by the actions of a single player. That said, this has nothing to do with the decentralised finance industry.
Who financed the Twitter buyout?
Apart from rumours, a publication allegedly about Bankman-Fried’s involvement in the deal was posted by the well-known news outlet Business Insider on 23 November. The article was based on another article from the recently launched Semafor news website. It talked about Musk’s offer to the then FTX executive to “transfer” his existing shares in Twitter to the company, which was soon to go private under Musk’s leadership.
Twitter’s new CEO Ilon Musk
Through his spokesman, Bachman-Fried allegedly expressed his willingness to invest in Twitter in a big way: journalists report a figure as high as $10 billion from the former FTX CEO. In the end, however, Sam did not put any additional capital into the deal. Before Musk bought the company, Bankman-Fried only invested in Twitter shares: on FTX’s balance sheet, this investment is shown as $43 million in illiquid assets.
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According to Decrypt’s sources, Ilon Musk called the Business Insider publication “false” and asked the journalists to “just give up” – probably in an attempt to seek a heave on both the Twitter purchase and the FTX bankruptcy.
A rebuttal to the article from Ilon
The billionaire also found one interesting fact: it turns out that Semafor is owned by Bachmann-Fried himself. There is clearly a serious conflict of interest here, which means that journalism in this form can “just be sent to the bin”, Musk reported.
Top investors in Semafor, with Bankman-Fried among them
A similar piece about Semafor’s investment also appeared in The New York Times. Musk reacted to it as well, calling the article “the biggest failure of journalism of the 21st century”.
Criticism of journalists who serve up news about Sam Bachmann-Friede in a light-hearted way, from Ilon Musk
Musk and Bunkman-Fried met in person in March this year thanks to Will MacAskill, an Oxford philosophy professor who allegedly advised Sam on the principles of “effective altruism”. Information about this became public because of a lawsuit by Twitter against Musk, which had just forced the latter to finally go ahead with the purchase of the company.
Immediately after the personal introduction, Sam published a tweet in which he described what a “decentralised” Twitter could be. The same tweet was sent to Musk by SpaceX and Boring Company investor Michael Keeves, who “thought it was a great idea to pull this off with Sam Bunkman-Fried.” Around the same time, Ilon announced a desire to buy Twitter – meaning they were talking to Sam about the possibility of investing in a deal together.
But on 12 November Musk publicly claimed that Sam had “flashed his lie detector” – the former CEO had allegedly offered at least $3 billion to invest in the deal, but Ilon didn’t believe the former FTX chief had that amount in liquid assets. As we can see, Musk turned out to be right after all.
To be more precise, we are talking about the so-called "bullshit detector" that Ilon mentioned. At the same time, Musk said he didn't want a time-consuming debate about Twitter's possible blockchain-based future. Read more about this in a separate article.
FTX founder Sam Bankman-Fried
As a reminder, it was previously revealed that the financial difficulties of FTX and its associated Alameda Research had started to show months before their actual bankruptcy. That is, Bankman-Fried would not have had the necessary capital even if Ilon had agreed to work with him.
We think Sam Bankman-Fried may well have been involved in the Twitter acquisition deal. Whose money he would have used to do so is unknown, though. As recent events have shown, FTX users' assets were not equally secured, which means their money went to other activities. One is left to agree here that a possible deal with Sam would lead to reputational problems for Ilon in the long run.
What do you think about this? Share your opinion in our cryptochat. There, talk about other important developments that affect what’s happening in the world of digital assets.
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