Billionaire Founder of Coinbase Rejects Sam Bankman-Fried’s Account of Events, Says Funds Were ‘Stolen’
The CEO of the major crypto exchange Coinbase, Brian Armstrong, basically called the FTX founder Sam Bankman-Fried a liar, stating that the latter couldn't have possibly missed billions of 'extra' dollars showing up in the accounts.
After laying low for a brief period of time, the former FTX CEO has done interviews in an effort to explain what had happened to the exchange and the customer funds - but his explanations have drawn dissatisfaction and criticism from the crypto community who see these as (poor) attempts at damage control.
Commenting on Bankman-Fried's version of events that led to the fall of his exchange, Armstrong wasn't mincing words, stating that,
"It's stolen customer money used in his hedge fund, plain and simple."
The implication here is that the money was used to fill a hole in the balance sheet of FTX's parent company and brokerage arm Alameda Research.
According to Armstrong,
"I don't care how messy your accounting is (or how rich you are) - you're definitely going to notice if you find an extra $8B to spend."
Armstrong went on to say that "even the most gullible person should not believe Sam's claim that this was an accounting error."
As a reminder, after reappearing in public, Bankman-Fried blamed bad accounting and “huge management failures” for the company's failure, and for $8 billion being moved from FTX to Alameda. The relationship between these two companies continues to be scrutinized and has turned quite controversial following the FTX implosion.
In The New York Times interview, the former CEO stated that he "did not ever try to commit fraud on anyone", that he "didn't knowingly commingle funds", that he "was frankly surprised by how big Alameda’s position was", and that there was "a massive failure of oversight of risk management and of diffusion of responsibility from myself running FTX."
Fortune reported on Sunday that Armstrong opined that it’s “baffling to me why [Bankman-Fried is] not in custody already.”
Meanwhile, some commenters called out Bankman-Fried - who graduated with a bachelor's degree in physics and a minor in mathematics from the Massachusetts Institute of Technology - for previously tweeting about other companies' finances - notably in this case, Coinabse's earnings - instead of focusing on his own company's accounting.
Maybe some less time spent on Coinbase earnings and more on his own accounting...https://t.co/0ZwBxndPvm— Sriram Krishnan - sriramk.eth (@sriramk) December 3, 2022
FTX and Alameda are currently in bankruptcy proceedings, having filed the documents on November 11.
Following the FTX collapse, there were reports that some $1 billion - $2 billion of client funds were missing and that Bankman-Friend secretly moved $10 billion to Alameda.
In late November, James Bromley, counsel to FTX’s new management, said during a bankruptcy hearing that a “substantial amount” of FTX’s assets are either missing or have been stolen.
Per Bromley, the former leadership exhibited an utter lack of professionalism in managing billions of dollars in users’ cryptoassets. “What we have here is a worldwide, international organization, but which was run as a personal fiefdom of Sam Bankman-Fried,” he claimed.
Going back to Coinbase, soon after FTX filed for bankruptcy, the older exchange took out a full-page ad in the Wall Street Journal, saying: “Trust Us.”
Learn more: - Coinbase CEO Reveals Company Holds Over $39 Billion Worth of BTC In Response to Now-Deleted Binance CEO Tweet- Earnings Report: Coinbase Loses $545 Million in Third Quarter – Stock Plummets- Sam Bankman-Fried Loses $17 Billion Fortune, Now Down to Just $100,000 in the Bank- Sam Bankman-Fried Interviewed Live About the Collapse of FTX