What FTX management is to blame

The erosion of trust in the crypto sector, exacerbated by unprecedented regulatory scrutiny, is only some of the consequences of the events surrounding FTX. Still, this case uncovered a massive fraudulent scheme with billions of dollars of customer funds being used directly by exchange management. We are talking about Sam Bankman-Frieda and his inner circle.

Greval made the following statement on a podcast called gm journalists Decrypt.

There is no doubt that FTX has set the whole industry back, and frankly has taken over every topic of discussion around cryptocurrencies.

Here’s another quote from him.

What happened with FTX was nothing short of outright fraud. And that should cause everyone, including regulators, to be concerned. There could also be talk of a pause to make sure that such tragedies never happen again.

This negative hype around the trading platform is due to the glaring facts that have come to light since its collapse. We are talking about shoddy financial reporting, the loose use of client money for the needs of management, the purchase of expensive real estate by the company’s founders – and this is just a small part of what the new head of FTX in the person of lawyer John Ray III is now forced to deal with.

John Ray III has taken up the position because he already has a wealth of experience in liquidating debts of large companies. Incidentally, new details emerged in the bankruptcy lawsuit the previous day: it turns out that FTX management tried to arrange a meeting with representatives of the Federal Deposit Insurance Corporation (FDIC) just months before the bankruptcy.

The head of policy at FTX.US at the time was Mark Wetjen. It was he who sent a letter to FDIC chairman Martin Gruenberg on behalf of Sam Bankman-Fried to introduce the exchange and set up a meeting between them. The letter has the following lines.

We are in the unusual position of begging the federal government to regulate us.

In another paragraph of the letter, Wetjen argues that the “single best thing” the US government can do to reduce the risks of the crypto market is to regulate exchanges.


We can assume here that FTX was already having serious problems at the time, which exchange representatives were trying to solve through dialogue with regulators. Wetjen and Gruenberg met only once. And it can be assumed that their meeting did not bring the expected results.

Incidentally, Sam Bunkman-Fried as head of FTX previously tried to promote the need to regulate decentralised platforms. That is, even then it was clear that the entrepreneur is not particularly interested in the ideals of decentralized assets and their independence from various regulators.


Earlier data was also published about the salaries received by senior staff at FTX and related trading company Alameda Research. Specifically, the former CEO of bankrupt crypto exchange FTX, Sam Bankman-Fried, received $2.2 billion in salaries and loans from Alameda Research, which was also founded by him.

The figure is huge compared to even other executives in his ‘crypto empire’. In particular, Alameda executive Caroline Allison only received about $6 million during her entire tenure.

How much was earned at FTX

Information on staffing costs within FTX has emerged from another meeting in the exchange’s bankruptcy case. According to Decrypt’s sources, in total, former FTX employees received around $3.2 billion in payouts. Most of this amount was secured from Alameda funds, which in turn were also generated from customer money.

Recall that Alameda Research found itself at the centre of the scandal immediately after the official bankruptcy filing of FTX last November. It emerged then that the trading firm was actively using exchange clients’ funds for its own needs, with such withdrawal transactions not appearing in the accounts of either company.

The management of Bankman-Fried’s ‘crypto-imperium’ was in a state of chaos, as current FTX CEO John Ray III has repeatedly stated. The negligence of FTX and Alameda management in keeping financial records is now one of the difficulties that is preventing the rapid reimbursement of funds to all those affected.

Bankman-Fried received most of the aforementioned $3.2 billion. Meanwhile, former CTO Nishad Singh received $587 million and co-founder Gary Wang received $246 million. Former FTX Digital Markets chief executive Ryan Salame earned $87 million and former Alameda Research executive Sam Trabucco earned $25 million.

It’s worth noting that Trabucco resigned as CEO of Alameda in August and hasn’t been heard from since. His place was taken by Caroline Allison a few months before the bankruptcy. Moreover, no charges have yet been brought against Trabucco by US authorities. Sam, on the other hand, has already faced twelve criminal charges.

We believe FTX's collapse was indeed a negative development for the cryptocurrency industry and its reputation in general. However, the world is now on the cusp of a banking credit crunch, making digital assets themselves seem a much more secure investment vehicle due to their decentralisation. Accordingly, current developments could significantly improve the perception of cryptocurrencies by ordinary people outside the blockchain industry. And if betting on Bitcoin and other coins pays off, the FTX situation is unlikely to be remembered afterwards.