Once a crypto billionaire, Sam Bankman-Fried and both his founded companies—crypto exchange FTX and trading firm Alameda Research—are in the midst of an extreme crisis. The bad omen started for the companies escalated badly as it would have to face other lawsuits in addition to their ongoing fall.
Recently it is reported that Alameda Research could face legal scrutiny for several comments made as promotional statements. In 2018, the company claimed and promised their investors returns with “no risk”. The company went on to make bold claims like the investments would have no downside and will be offering high returns.
The report mentioned the claims that Alameda made during 2018 about deck included investment opportunities would be yielding 15% fixed annualized rate. This would also include higher rates said to be available for investors who wish to make more investments with the company.
President and CEO of Healthy Markets, markets integrity nonprofit, Tyler Gellasch said that claims put forward by Alameda Research could act as an instance likely to raise red flags. Further he also added that entrepreneurs involved in soliciting investors would need to specify the involved risks in the investment and also the slidedeck would have clearly understandable language. This could lead to raising the criminal and civil investigations against the firm.
Alameda Research’s deck noted that loans provided by the firm have no downside as they guarantee the full payment of principal as well as interest. This is enforceable under the law within the United States as all parties’ legal counsel established together.
It further noted the company’s extreme confidence in paying the amount. The company claimed in any case if it misses to lose over 2% every month, it will give an opportunity to all the investors recalling the funds.
Sam Bankman-Fried Agrees the Promises were Non-sense
Founder and CEO of FTX, Sam Bankman-Fried resigned from his post within the company on the same day when the company went on to file for bankruptcy under the Chapter 11 bankruptcy code.
SBF also expressed his lament for the language used by the trading firm to pitch the investors in 2018. He said it was a hasty preparation for the deck. This could not be excused and neither could it be done in the first place. He said that he should have read the final draft before it got released. Including “no risk” in the deck was completely rubbish and it should not be put there.
Source: https://www.thecoinrepublic.com/2022/11/16/alameda-research-should-not-have-boast-its-investment-as-no-risk-sbf/