FTX: What happened to Sam Bankman Fried?

Here are updates regarding the situation of Sam Bankman Fried, the former CEO of FTX, who has made various statements regarding the solvency of FTX US. In addition, the former president of FTX US himself has accused him of threats against him. 

Related again to the case, many issues have come to light, pertaining to the movements of Alameda Research, issues once again denied by Sam Bankman Fried.

Here is what happened with FTX US

If popular opinion believes that Sam Bankman Fried is guilty, the former FTX CEO misses no opportunity to deny the rumors. Although by now, having reached this point we cannot speak of rumors, but concrete situations confirmed by more than one person, all that is missing is the confirmation in court that will make Sam Bankman Fried for all intents and purposes guilty. 

The team headed by John J Ray III, has repeatedly confirmed the news that both FTX and FTX US are missing millions in customer funds. Sam Bankman Fried, however, could not help but say that the news is false and that FTX’s restructuring team is doing it wrong. 

Yesterday the current CEO of FTX gave a presentation to the company’s committee of creditors, identifying 181 million funds in debt for FTX US alone.  

According to Bankman Fried, however, the restructuring team failed to take into account many aspects of the matter, starting with customers’ bank balances. This according to SBF is a factor that brings FTX US’s assets, well above its liabilities. 

Sullivan and Cromwell (S&C), one of the law firms handling the FTX bankruptcy were considered by former CEO Sam Bankman Fried “extremely misleading” regarding the exchange’s situation in the United States:

“These S&C claims are wrong and contradicted by data later in the same paper. FTX US was and is solvent, probably with hundreds of millions of dollars in excess of customer balances.”

He used the same words just before FTX filed for bankruptcy through Chapter 11, and we all know how it all turned out. 

Going into more numerical detail, FTX’s business rebuilding team, along with the law firms involved in the matter, released the detailed numbers. FTX’s customer balance is worth $497 million, compared to the $187 million in digital assets that FTX US owns. Therefore, there is a huge gap weighing on the US-based company. 

Former FTX US President Accuses Sam Bankman Fried

Heavy accusations are coming toward Sam Bankman Fried from Brett Harrison, the former president of the FTX US company. The former president said he was threatened by SBF himself for attempting to make changes to the administrative structure of FTX US. 

What Brett Harrison accuses SBF of doing is manipulating and threatening anyone on the team who proposed solutions to reorganize the exchange’s administration. On 14 January Harrison gave an interview, highlighting several text messages, dating back to March 2021. 

“In that first conflict, I noticed his total insecurity and intransigence when his decisions were questioned … his nastiness, the volatility of his temperament. I realized that he was not the Bankman-Fried I remembered.”

The former president of FTX US, not explaining what the change in Sam Bankman Fried was due to, also speculated some mental health issues. 

He also repeatedly pointed out SBF’s tendency to manipulate its employees, several times turning them against each other. 

“In response, I was threatened on Sam’s behalf that I would be fired, and that Sam himself would destroy my professional reputation. I was asked to formally retract what I had written, and to send Sam an apology that had been drafted for me.”

The latest threats related to one of the last discussions between the two led Harrison to leave the company. Brett Harrison’s goal was only to resolve problems related to administration, but his request was not met serenely. 

“I could never have imagined that underlying these problems, which I had already experienced in my career in other, even more mature companies, and which I believed were not crucial to the company’s success, was a multibillion-dollar fraud.

If any of us had learned the truth, or even suspected such a thing, we would have immediately reported it to the authorities.”

Harrison terminated his contract with FTX US on 27 November, five weeks before the FTX disaster. His statements on the matter explain that he was unaware of the extent of the problem. No one, including him, could have expected a multimillion-dollar fraud of this magnitude.