2-hour sit-down with Sam Bankman-Fried on the FTX scandal

Episode 121 of Season 4 of The Scoop was recorded remotely with The Block’s Frank Chaparro, and Sam Bankman-Fried, Co-Founder of FTX and Alameda Research.

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In this episode of The Scoop, Sam Bankman-Fried describes how a legacy payment system linked FTX’s future to Alameda Research’s fate, and explores why regulators and auditors alike failed to discover this relationship.

According to Bankman-Fried, many FTX customers would fund their accounts via direct wire transfers to Alameda Research bank accounts:

“What that flow I think looked like was basically: Bob wires $100 straight to Alameda Research, and then Alameda effectively ledger transfers $100 to Bob on FTX.”

SBF has claimed that wired customer funds contributed to over half of Alameda’s position on FTX, likely totaling over $5 billion, as reported by the WSJ.

In hindsight, SBF says a “reasonably responsible” way of managing direct wire transfers would have been only debiting Alameda’s primary FTX account. In practice, however, wired customer funds were being credited from an Alameda stub account that SBF says “was specifically meant to be a ledger for wire transfers.”

When pressed on how regulators and auditors failed to uncover the extent of Alameda’s relationship to FTX, SBF alleged that customer positions — including Alameda’s — were not part of FTX’s balance sheet:

“This was effectively a customer negative position, and many customers had negative positions open on FTX… Those were not part of FTX’s assets or liabilities, they were customer assets and liabilities, and so FTX’s financials were not directly impacted by this.”

During this episode, Chaparro and Bankman-Fried also discuss:

• Why top executives were extended large personal lines of credit
• If a BlockFi loan was used to purchase Robinhood equity
• Whether or not FTX effectively contributed to charity

This episode is brought to you by our sponsors Tron, Ledn, Athletic Greens

About Tron
Founded in 2013, Huobi Global is one of the largest virtual asset exchanges in the world. Huobi Global serves millions of users across international markets. Since its establishment, Huobi Global has committed to providing first class virtual asset investment services. Huobi Global’s robust infrastructure, product innovation and capital strength provides a truly customer-centric and secure trading environment to help our international users to achieve their investment objectives. Please refer to Huobi’s official website for more information: huobi.com.

About Ledn
Ledn was founded on the unshakeable conviction that digital assets have the power to democratize access to the global economy. We help you to experience the real life benefits of your Bitcoin without having to sell it. Start a savings account, take out a loan, or double your Bitcoin. For more information visit Ledn.io

About Athletic Greens
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