Did the FTX founder know all the problems of the crypto exchange: Coinbase CEO’s view
Coinbase CEO Brian Armstrong is convinced that its founder, Sam Bankman-Fried, should be directly responsible for the collapse of FTX. This was said even despite the latter’s claims that he was allegedly “unaware” of all the accounting intricacies of the company’s financial flows. According to Armstrong, Sam could not have failed to notice the hole of $8 billion in the budget of the stock exchange, which means that now he should not evade answers or shift the blame for what happened to someone else. We tell you more about what happened.
As a reminder, immediately after the FTX collapse there were rumours that about $10 billion in crypto had been withdrawn from the exchange's wallets into the accounts of Alameda Research, a trading firm founded by the same Bachmann-Friede. Sam refutes these speculations - during a recent DealBook Summit event, he said he couldn't have known all about the financial flows between the two organisations.
At the same time, other people are reporting a much larger scale of problems. According to sources, a so-called backdoor was created in the FTX system, which allowed Alameda representatives to take money from deposits of FTX platform customers. Moreover, this feature was hidden from the auditors and other similar employees, which means they simply did not see what was happening.
As Bankman-Fried told The Block’s Frank Chaparro the day before, when asked about the possibility of a backdoor, “anything could have happened”. That is, he did not deny the possibility of the existence of such a “tool”.
We recommend watching this interview, because not only does it contain incisive questions, but also a host with insight, who in addition repeatedly stops Sam trying his best to avoid a direct answer. If you can understand English by ear, of course.
Who is to blame for the death of cryptocurrency exchange FTX?
Sam Bankman-Fried graduated from the prestigious Massachusetts Institute of Technology with a degree in physics. According to Armstrong, a man with at least one such point on his record already could not have had a massive disaster due to an oversight. Here’s his rejoinder, cited by Decrypt.
I don’t care how messy your accounting is. You will definitely notice an extra $8 billion to spend. Even the most naive person should not believe Sam’s claim that it was an accounting error. It’s stolen client money that was used in his hedge fund, that’s all.
Coinbase CEO Brian Armstrong
The negligence of FTX management was previously confirmed by the exchange’s new chief executive, lawyer John Ray III. He is leading the company’s bankruptcy case. According to Ray, in decades of his legal practice he has never seen such irresponsible management of the company. And yet huge sums are involved, so Bunkman-Fried must have been aware of what was going on.
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Bachmann-Fried has now been invited to appear before the US House of Representatives Financial Services Committee. Committee member Representative Maxine Waters tweeted Sam offering to speak to politicians to clarify the fallout from the FTX bankruptcy. Here’s her quote.
Sam, we appreciate that you have been forthright in discussing the FTX situation. Your willingness to speak to the public will help the company’s customers, investors and others. As such, we look forward to your participation in the hearing on the 13th.
FTX founder Sam Bankman-Fried
It was only an informal invitation, meaning that Bankman-Fried does not have to appear before Congress. Sam chose not to give a categorical response and confined himself to the following tweet, which many perceived as boorish.
As soon as I have finished researching and analysing what happened, I will consider it my duty to appear before the Committee and provide an explanation. I’m not sure it will happen before the 13th. But when it does, I will testify.
Waters’ “too soft” tone and Bankman-Friede’s evasive response have caused a storm of emotion in the cryptocurrency community. Here’s what Coinbase General Counsel Paul Grewal wrote on the matter.
Our elected representatives show great restraint in communicating their intentions. And yet this scammer insults their credibility. What a shame.
It is possible that for the foreseeable future the tone of politicians towards Sam will be much harsher. For that, however, we have to wait for the development of the court case for the bankruptcy of the stock exchange.
We believe that after the correspondence with the US government official Sam Bankman-Friede's position has become more precarious. Obviously, public pressure will not allow the aforementioned Maxine Waters to turn a blind eye to the case, so Sam will surely end up at the hearings eventually. Well, it's up to the participants, who will surely be able to find inconsistencies in Bankman-Fried's current statements and his previous positions.
Stay tuned for more news in our millionaire cryptochat. There we talk about other important topics related to the blockchain and decentralisation industry.
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