Sam Bankman-Fried, the former Chief Executive Officer (CEO) of now-bankrupt cryptocurrency firm FTX has recently made some intriguing revelations.
One of which is the fact that Alameda Research was given preferential treatment based on its very close association with FTX. The disgraced CEO said his trading firm received oversized borrowing limits in comparison to other FTX clients from the time of its establishment.
For now, the exact size of the limit is yet to be known although SBF said that the possibility of continuation after the founding of the exchange exists. SBF believes that Alameda enjoyed this opportunity due to the fact that it played the role of the main liquidity provider for FTX during the time of its founding. This happened way before other financial firms signified their interests.
Speaking at an interview with Financial Times, Bankman-Fried said;
“If you scroll back to 2019 when FTX was first started, at that point Alameda was 45 per cent of volume or something on the platform. It was basically a situation where if Alameda’s account ran out of capacity to take on new positions that would lead to risk issues for the platform because we didn’t have enough liquidity providers. I think it had fairly large limits because of that.”
SBF Denies Fraud on FTX
Fast forward to today, Alameda Research holds only 2% trading volume in FTX while its liability to the troubled exchange is up to the tune of $10 billion as at the time of its bankruptcy filing. This confession is part of SBF’s way of owning up to the wrongdoings in FTX before its liquidity crunch.
A few days ago, Bankman-Fried explained that he never planned to commit fraud on FTX. He denied allegations that suggested otherwise. Additionally, he apologized to the entire crypto community and admitted the fact that he failed in his responsibilities to regulators, clients, and investors.
“I made a lot of mistakes. There are things I would give anything to be able to do over again. I didn’t ever try to commit fraud on anyone,” SBF added “I saw it as a thriving business and I was shocked by what happened this month.”