Blockworks investigated the inner workings of FTX and Alameda in the days preceding up to their respective collapses.
Sam Bankman-Fried’s crypto enterprise started showing serious signs of strain a year ago. From the second biggest cryptocurrency exchange to insolvent with $8 billion in missing client funds in only six days.
All of this would emerge in the weeks and months after FTX’s demise. Employees and key members of Bankman-Fried’s team testified in October 2023 to confirm the thorough investigations performed by current FTX CEO and Enron celebrity John J. Ray III.
Caroline Ellison, Alameda’s former CEO, said that he allegedly wanted seven phony versions of the company’s financials. In his evidence, Bankman-Fried contested this, saying he couldn’t remember the other versions Ellison was accused of creating.
“Ellison told me that she was thinking about sending something like this out and had thought about a few different ways to put it together,” Bankman-Fried said.
Ex-FTX engineering director Nishad Singh claims that the $13 billion hole in the company’s financial sheet was known to Bankman-Fried as early as September. FTX software programmer Adam Yedidia managed to trick Bankman-Fried into admitting that FTX was not “bulletproof” in June of 2022.
Bankman-Fried somewhat corroborated Yedidia’s account. He admitted using the term “bulletproof,” but denied doing so in the manner his ex-employee had implied. When the lawyer asked Bankman-Fried about the $13 billion hole that Singh brought up, he said that he “probably” talked about it with Ellison on Signal.