Illustration by Stephanie Jones for Forbes; Photo by Virgile Simon Bertrand for Forbes
With customers, investors and, potentially, law enforcement closing in, the fate of crypto wunderkind-turned-pariah Sam Bankman-Fried may rest on two key questions: What did he know about Alameda Research, and when did he know it?
Since the stunning, early November collapse of both Alameda, a secretive crypto hedge fund Bankman-Fried cofounded in 2017, and FTX, a crypto exchange he cofounded in 2019 and grew into one of the world’s largest, speculation has run rampant about how the two operations were intertwined and what chain of events drove both businesses into bankruptcy.
Bankman-Fried, in a series of high-profile media appearances this week, has begun offering his own working theory: Alameda took on far too much leverage to make risky investments on the FTX platform, and FTX failed to recognize and prevent it. A key claim: that Bankman-Fried himself didn’t really know what Alameda was up to.
“I was frankly surprised by how big Alameda’s position was,” Bankman-Fried said at The New York Times’ DealBook Summit on Wednesday. “Alameda is not, like, a company that I monitor day-to-day,” he claimed to New York magazine in an article published Thursday. “It’s not a company I run. It’s not a company I have run for the last couple years. And Alameda’s finances I was not deeply aware of. I was only surface-level aware of Alameda’s finances.”
Just how “surface-level” remains to be uncovered, as a bankruptcy team picks through the wreckage to retrace what occurred. But a look inside Bankman-Fried’s discussions with Forbes provides an early baseline of Bankman-Fried’s awareness of Alameda’s dealings: Since January 2021, Bankman-Fried has sent Forbes details of some of Alameda’s major holdings at least five times in response to questions about his net worth, including explaining the specifics of certain transactions and updating the number of FTT, Solana and Serum tokens Alameda held–as recently as late August.
Most of the world’s billionaires would rather not discuss their wealth. Not Bankman-Fried, who Forbes first approached about the subject in January 2021. “[H]appy to give an outline,” he wrote in an email. Later that week, he sent a handful of documents showing his ownership stakes in FTX (around half) and Alameda (90%), screenshots of wallets that held cryptocurrencies–and a Google Sheet listing his assets line-by-line, including details of his FTX equity plus holdings of 67.8 million Solana tokens, 193.2 million FTT tokens and 3 billion tokens of Serum.
Two months later, when Forbes was updating estimates for our annual World’s Billionaires list, Bankman-Fried updated the spreadsheet. Crypto prices were on the rise, plus Alameda had upped its share of FTT tokens, to 195.8 million. “Alameda funds under management, approx.” reads one line: $32,534,779,809. A separate column, listing only tokens that were unlocked–meaning able to be transacted–pegs Alameda’s total funds at a more modest $14.7 billion.