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SBF

How The FTX Bankruptcy Unwound Crypto's Very Bad Good Guy

Wiley,

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Follow the twisted saga of FTX – Sam Bankman-Fried’s cryptocurrency exchange – from boom to bankruptcy.

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8

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The saga of Sam Bankman-Fried, known as “SBF,” is a cautionary tale centered in either the still-emerging or the now-collapsing universe of cryptocurrency. SBF and his team’s secret machinations drove their crypto exchange, FTX, into bankruptcy – but it failed only after their dealings came to light. Friedman also co-founded the trading firm Alameda Research, which lost money investing FTX customers’ funds without their knowledge. Alameda also accumulated more FTX exchange tokens than it could sell without deflating their value. Axios journalist Bill Daley details the events that led to SBF’s indictment, incarceration and trial, although his engrossing book ends before Friedman’s conviction, handed down on Nov. 2, 2023.

Summary

Despite the claims of Sam Bankman-Fried (”SBF”) to the contrary, his companies – the cryptocurrency exchange FTX and the crypto trader Alameda – were not separate entities.

Sam Bankman-Fried, nicknamed “SBF,” co-founded Alameda Research, a crypto trading firm in 2017. He founded the FTX cryptocurrency exchange in 2018. Publicly, FTX and Alameda appeared to be separate businesses. However, a 2022 article on CoinDesk, a crypto industry news website, revealed constant – and possibly illegal – fund swapping between the two entities. That article marked the beginning of the end of SBF’s empire.

CoinDesk reported that a quarter of Alameda’s $14.6 billion in assets consisted of FTX “exchange tokens,” called “ftt.” Owning ftt entitled FTX customers to buy services from the exchange and collect a share of its profits.

According to a complaint the Commodity Futures Trading Commission (CFTC) filed in December 2022, Alameda secretly borrowed funds from FTX, contrary to FTX’s terms of service with its clients.

Billionaire Changpeng “CZ” Zhao, who founded the cryptocurrency trading company Binance, responded...

About the Author

Axios cryptocurrency reporter Brady Dale is a co-writer of the Axios Crypto newsletter.

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