Sam Bankman-Fried Blames Binance for Initiating FTX’s Downfall

In a riveting development within the criminal trial of Sam Bankman-Fried, explosive evidence has emerged, implicating Binance in the alleged leak of a critical Alameda balance sheet.

In a dramatic twist during the ongoing criminal trial of Sam "SBF" Bankman-Fried, former CEO of the cryptocurrency exchange FTX, startling evidence has come to light. Bankman-Fried, who is facing seven charges of conspiracy and fraud related to FTX's collapse, has alleged that Binance played a role in leaking a crucial Alameda balance sheet to the media in 2022. This revelation, presented in court, has sent shockwaves through the cryptocurrency community, as it sheds light on a series of events leading up to FTX's downfall.

Read also: FTX recovered $7.3 billion, seriously considers revival

Meanwhile, Caroline Ellison, former CEO of Alameda Research, has disclosed a series of concerns and actions undertaken by former FTX CEO Sam Bankman-Fried in the lead-up to the exchange's collapse. Ellison's personal notes, presented during the trial yesterday, reveal Bankman-Fried's preoccupation with multiple objectives, including securing funding from a Saudi crown prince, investing in Snapchat, and seeking regulatory intervention against rival exchange Binance.

FTX CEO Sam "SBF" Bankman-Fried Accuses Binance of Leaking Alameda Balance Sheet

In a surprising turn of events during the ongoing criminal trial against Sam "SBF" Bankman-Fried, the former CEO of the cryptocurrency exchange FTX, new evidence has emerged that suggests Bankman-Fried believed Binance played a role in leaking an Alameda balance sheet to the media in 2022. The revelation came to light during the trial's second week and has raised eyebrows in the cryptocurrency community.

Read also: FBI raids home of former FTX exec and SBF's co-CEO

On 11 October 2023, Caroline Ellison, the former CEO of Alameda Research, took the stand and presented a memo dated 6 November 2022, allegedly authored by SBF himself. The memo outlined possible investors and other parties to contact for a bailout. Within the document, Bankman-Fried alleged that Binance had been "engaging in a PR campaign against us."

According to the memo, Bankman-Fried went on to claim that Binance had "leaked a balance sheet; blogged about it; fed it to CoinDesk; then announced very publicly that they were selling $500 million of FTX Token (FTT) in response to it while telling customers to be wary of FTX."

The repercussions of this alleged leak were significant. On 2 November 2022, CoinDesk reported that it had seen a balance sheet from Alameda and hinted that the firm might be facing financial difficulties. This revelation played a pivotal role in the events leading up to FTX's downfall and eventual bankruptcy.

The memo also shed light on the financial state of FTX at the time, with Bankman-Fried noting that the exchange was capitalized but not entirely liquid. Ellison clarified this by revealing that out of the reported $12 billion in client assets held by FTX, only $4 billion was available for processing withdrawals.

Intriguingly, the document also suggested that Justin Sun, the founder of the Tron network and a Huobi adviser, was a potential investor. However, it stated that "it turns out he's close to [Binance CEO] CZ," hinting at a connection between Sun and Binance's leadership.

During Ellison's testimony, Inner City Press reported that she mentioned feeling "stressed" when Changpeng Zhao, the CEO of Binance, tweeted about liquidating his share of FTX Token (FTT), further underscoring the tension between the two cryptocurrency giants.

This latest development comes in the midst of Bankman-Fried's criminal trial, where he faces seven charges of conspiracy and fraud related to the collapse of FTX. The former CEO has consistently pleaded not guilty to these charges.

A second trial is already on the horizon, scheduled for March 2024. In this second trial, Bankman-Fried will face an additional six charges, including bank fraud and foreign bribery conspiracy charges.

As the legal proceedings unfold, the cryptocurrency community is eagerly watching, awaiting further revelations and insights into the events surrounding FTX's fall from grace and the allegations against SBF.

Sam Bankman-Fried's Concerns Revealed During Trial

Recently, startling revelations emerged during the trial of former FTX CEO Sam "SBF" Bankman-Fried, shedding light on his concerns and actions leading up to the collapse of FTX. According to Caroline Ellison's personal notes, presented as evidence during her testimony, Bankman-Fried was deeply troubled about various aspects of his business endeavors.

In her notes, Ellison revealed that in the weeks and months preceding the FTX collapse, Bankman-Fried was "freaking out" about Alameda, exploring investments in Snapchat, pursuing capital from a Saudi crown prince, and harboring ambitions of having regulators tighten their grip on rival cryptocurrency exchange, Binance.

Ellison recounted that a significant event leading to Bankman-Fried's apprehension was the crash in the Terra ecosystem in May 2022. This prompted him to consider the possibility of shutting down Alameda and seeking an ambitious $1 billion in capital from a Saudi Prince known for his investments in blockchain gaming through Saudi Arabia's sovereign wealth fund.

Another noteworthy objective for Bankman-Fried was to "get regulators to crack down" on Binance, a move presumably intended to bolster FTX's market share. However, Ellison did not provide specific details regarding Bankman-Fried's plan to achieve this regulatory crackdown.

Additionally, Bankman-Fried was actively seeking more funds from cryptocurrency lender BlockFi, which had already provided Alameda with over $660 million in loans.

Ellison testified that Bankman-Fried had multiple other concerns on his plate, including trading Japanese government bonds, investing in Snap Inc (SNAP) stocks, and seemingly ensuring the contentment of an individual referred to as "Willie." Although not explicitly mentioned, "Willie" was likely a reference to Bankman-Fried's mentor, William MacAskill.

During the trial, Bankman-Fried reportedly held Ellison responsible for Alameda's troubles and poor hedging strategies. Ellison admitted that a better hedging strategy might have helped Alameda weather the cryptocurrency winter. Still, she pointed out that the company had substantial open-term loans and had expended billions from its line of credit with FTX.

Open-term loans are characterized by the absence of a maturity date, providing the borrower with a prepayment option and the lender with a call option. In June 2022, lenders such as Genesis Capital began exercising their call option, necessitating the repayment of millions by Alameda. Under Bankman-Fried's guidance, Ellison repaid a portion of Alameda's debts using funds from FTX customers. By September 2022, Alameda's liabilities with FTX had soared to $13.7 billion, with open-term loans standing at $1.3 billion.

Additionally, Ellison disclosed that at Bankman-Fried's request, she created "alternative" spreadsheets for Alameda's lenders, obscuring the company's financial liabilities with FTX to present a more favorable picture and prevent lenders from demanding full repayment.

Amid the chaos, Ellison also revealed moments of emotional distress during her testimony. She expressed her anxiety about the possibility of customers withdrawing their funds from FTX amid the "liquidity crush" at Alameda, highlighting the immense pressures Bankman-Fried faced in trying to navigate the complex financial landscape.

As the trial continues, the revelations from Caroline Ellison's testimony provide further insight into the challenges and pressures that Sam Bankman-Fried faced in the lead-up to the collapse of FTX. The cryptocurrency community and legal observers eagerly await further developments in this high-profile case.

Price Overview

Data from the cryptocurrency price tracking website CoinStats indicated that FTX’s native token, FTT, had achieved a fair gain over the past 24 hours. At press time, the altcoin’s price was up 1.65%. As a result, it was trading hands at $1.05.

Price chart for FTT (Source: CoinStats)

Meanwhile, FTT was also able to outperform Bitcoin (BTC) throughout the past day of trading, and was up 1.79% against the market leader. This meant that 1 FTT token was estimated to be worth 0.00003911 BTC.