According to Sam Bankman-Fried (SBF) statement cryptocurrency Trading firm Alameda Research has been given very high borrowing limits compared to FTX’s other clients.
SBF: “We Gave Alameda a Much Higher Borrowing Limit than Other Companies”
In an interview with the Financial Times on Saturday, Sam Bankman-Fried said that when he founded the crypto exchange, Alameda was able to borrow at high levels in FTX.
He did not specify how large the limits were compared to other customers, but emphasized that FTX may have continued after its inception.
He said the origins of large borrowing limits stem from Alameda’s role as the main liquidity provider in the founding of FTX, before other financial groups showed interest:
“If you go back to 2019 when FTX first started, Alameda at that point was something like 45 percent of the volume on the platform. Basically, it was a situation that would cause risk problems for the platform if Alameda’s account had run out of capacity to take new positions because we didn’t have enough liquidity providers. I guess that’s why they had pretty big limits.”
He stated that Alameda accounts for only 2% of the transaction volume on FTX as of 2022.
The discredited founder said Alameda’s liabilities to FTX were approximately $10 billion at the time of filing for bankruptcy.
This is the last in a series of confessions FTX has made to the media since filing for Chapter 11 bankruptcy protection last month.
On Wednesday, Bankman-Fried told the New York Times that he “made a big mistake” and took responsibility for Alameda Research’s lack of supervision that led it to take risky positions with FTX.
The former CEO of FTX admitted in an interview with ABC News on Thursday that he never takes the time to manage risk.
*Not investment advice.
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