Did SBF Admit to Fraud and Mishandling Users’ Funds on Twitter?

In Brief

• Shortly after appearing in an interview at the New York Times' DealBook Summit, former FTX CEO Sam Bankman-Fried appeared in another live event.
• One user asked, “Are you saying FTX US is solvent? Is this a way or trick so that the Department of Justice doesn’t charge you with a crime?”
• Another posted the FTX terms of service and accused the exchange of "stealing customer funds.”

Details remain unclear, but Sam Bankman-Fried (SBF) may have unintentionally admitted to fraud during a recent live Twitter space. Now, a ‘whistleblower’ is claiming to know more about FTX and Alameda Researchwere manipulating the market.

Shortly after appearing in an interview at the New York Times’ DealBook Summit, former FTX CEO Sam Bankman-Fried appeared in another live event. This time he was a guest during a Twitter Space meeting held by International Blockchain Consulting founder Mario Nawfal.
During this session, some of the more touched-upon points were SBF’s feelings regarding responsibility for any wrongdoings and comments on FTX.US solvency.

“The FTX U.S. platform is fully funded, and I believe withdrawals could be opened today.’ he claimed.

Sam Bankman-Fried in the Hot Seat
This raised questions about his motives behind the bankruptcy. Bankman-Fried answered that he was “coerced,” indicating that he was influenced or manipulated. Regardless of claims that FTX.US was solvent, there was not much he could do after losing his CEO seat:
“It’s not really in my hands to a large extent, but I would think that it would make sense to be exploring that because I think there’s a chance that customers could end up made a lot more whole, maybe even fully whole, if there was a concerted effort.”

One speaker suggested that SBF had intentionally aired his thoughts to avoid investigation by U.S. regulators:

“You saying FTX US is solvent? Is this a way or trick so that the Department of Justice doesn’t charge you with a crime?”

According to the Wall Street Journal, the Justice Department and SEC are already probing the FTX collapse. At the time of its downfall, FTX was headquartered in the Bahamas, where Bankman-Fried and many FTX executives were based.

Critical areas of concern
Even though SBF maintains an “I don’t know” narrative, he may have revealed two key insights, which were repeated on a loop after the disgraced founder left the Twitter space.

One of the accusations against Bankman-Fried is that he arranged for Alameda to use FTX customers’ assets to place bets on the market. Bankman-Fried indirectly opined that he did not “knowingly” co-mingle customers’ assets with Alameda.

This would be a clear violation of FTX’s terms and conditions.

But the exchange’s terms of service state that none of the cryptocurrencies in customer accounts are “the property of, or shall or may be loaned to, FTX Trading” and that the platform “does not represent or treat Digital Assets in User’s Accounts as belonging to FTX Trading.”

In other words, FTX cannot use the funds for purposes other than just holding them on customers’ behalf. One Twitter user posted the terms of service and went even further, saying, “FTX was literally stealing customer funds.”

Blowing Cover
Another speculation against SBF was that he was using FTX to manipulate the market. To shed further light on this matter, a so-called ‘whistleblower’ was invited to the space post-SBF’s exit.

Because FTX and Alameda were significant crypto entities, they attracted crypto developers who were seeking to be listed on the exchange. One such person was Hussein Faraj, the chief executive of NuGenesis, an Australian blockchain company.

Faraj struck a deal in 2022 with Alameda to support the launch of NuCoin, a crypto project he and his partners had been working on. Alameda represented itself as a partner to the NuCoin founders, Faraj said, a market maker that would help NuCoin gain traction with investors in the crypto market. NuGenesis agreed to loan Alameda 200 million NuCoins for two years.

At the end of the period, Alameda would either return the coins to NuGenesis or buy them from it at 38 cents each. Instead, they dumped the tokens. At that time, Faraj said that when he tried to buy NuCoin to counter the selling pressure, Alameda prevented NuGenesis from doing so, effectively destroying confidence in the project:
“With his exchanges, he prevented genuine buyers—including ourselves—from restoring the price,” Faraj said of Bankman-Fried. Faraj said Alameda later confirmed to NuGenesis that it had dumped 800,000 NuCoins on the market.

Raising similar concerns, Alex Mashinsky, founder of Celsius Network, tweeted:
Even back in 2019, a plaintiff of an entity known as Bitcoin Manipulation Abatement LLC sued FTX. It claimed that FTX was conducting a“manipulative and deceptive scheme” to manipulate Binance’s futures market.

Overall, crypto Twitter was still left with many unanswered questions.

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