New Report: Sam Bankman Fried’s Empire Began to Crumble Long Before the Crypto Crash – Here’s What Happened
The crypto empire controlled by disgraced FTX founder Sam Bankman-Fried was fragile for years, with cracks starting to show up already in 2022, a new report has suggested.
According to the report, published by the Wall Street Journal on New Year’s Eve, Bankman-Fried’s crypto trading firm Alameda Research “never was particularly good at investing.”
Alameda “took big gambles, winning some and losing plenty,” and a proper risk management was lacking, the report said about the trading firm, which was known for its close ties – and unrestricted access – to FTX.
The report contradicts earlier statements from Sam Bankman-Fried, who has insisted Alameda prospered until the crypto crash started in November of 2021. By that time, Bankman-Fried was already out as CEO of Alameda, and the firm was jointly led by Caroline Ellison and Sam Trabucco until August 2022, and then by Ellison alone.
Caroline Ellison has apologized for her role in the collapse of Alameda and FTX. She has agreed to plead guilty to seven offenses, which include charges of wire fraud, securities fraud, and money laundering.
According to the Wall Street Journal report, the lack of formal processes and a framework at Alameda was so apparent that Austin Campbell, a digital asset trader at CitiBank, grew skeptical of the firm when the bank and Alameda was exploring a partnership back in 2020.
Speaking with the WSJ, Campbell was quoted as saying:
“The thing that I picked up on immediately that was causing us heartburn was the complete lack of a risk-management framework that they could articulate in any meaningful way.”
As has been widely reported on, Sam Bankman-Fried and Alameda originally made its fortune by exploiting an arbitrage opportunity between crypto prices in
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