Twitter Thread Suggests SBF Considered Shutting Alameda Months Before Collapse

Twitter Thread Suggests SBF Considered Shutting Alameda Months Before Collapse

An unpublished tweet thread came to light as part of the ongoing criminal trial of the co-founder of the now-defunct FTX crypto exchange, Sam Bankman-Fried.

It shows that the disgraced crypto mogul had contemplated shutting down Alameda Research, the sister trading company of the crypto exchange.

The thread

It was in September 2022, just two months before the downfall of the FTX behemoth that the draft had been written by Sam Bankman-Fried.

On Tuesday, the thread was brought back to the fold by his defense team when they were questioning the former CTO of FTX, Gary Wang.

Alameda’s former software engineer, Aditya Baradwaj, publicly shared the thread in question. Bankman-Fried said in the thread that Alameda Research had been a big part of his life.

He had further added that the company had been one of his largest successes before turning into one of his largest failures and then turning into a success yet again.

Reasons for shutting down the hedge fund had also been mentioned in the said draft, which included the unwarranted cost of capital associated with the company.

Bankman-Fried had defined the cost of capital associated with the firm as extremely expensive in the current economic environment.

The reasons

Another reason cited in the draft for shutting down Alameda was the company’s inability to generate sufficient profits to warrant its continued existence as a liquidity provider.

The draft thread said that liquidity is vital for all ecosystems, but more so for a nascent one such as crypto.

The past few years had seen the number of sophisticated liquidity providers rise rapidly, which had rendered the on-chain trading of Alameda Research less important than it had been earlier.

The post also stated that less important did not mean that it was completely unimportant due to which he would announce that Alameda Research was conducting its final trade.

The mention

It is important to note that in December 2022, the Commodities Futures Trading Commission (CFTC) filed a complaint where they had mentioned the thread for the first time.

The regulatory body had filed a lawsuit against Bankman-Fried for violating federal commodities laws.

According to the CFTC, the statements were in contradiction to what Alameda and Bankman-Fried had been saying at the time.

Another document had been cited by the CFTC in the complaint in which SBF had admitted that it may have been time to shut down Alameda and that they should have done it a year earlier.

The alleged crypto crook had also blamed the FUD (Fear, Uncertainty, and Doubt) surrounding Alameda and FTX’s relationship, claiming that justifying its existence was too much of a burden.

He stated that competitors of FTX had spread the FUD because they wanted to distract others from their problems.

The former CEO of Alameda, Caroline Ellison, appeared in court on Tuesday and testified that they had manipulated their balance sheet intentionally to present investors with a less risky image.

She also claimed that Alameda had borrowed customer funds from FTX worth $14 billion on Bankman-Fried’s direction to pay off its lenders.