Most recently, SBF has been running around doing a ton of interviews with every media outlet that will bother to hear him out. This is despite him having an ongoing trial. So far he has been to the New York Times and ABC News, who tried to grill him – softly.
However, when he got to famous YouTuber, CoffeeZilla, things did not go down so smoothly.
First off, for those of you who don’t know SBF here is a brief intro:
Sam Bankman-Fried (A.K.A) SBF. He is the ex-CEO of FTX Exchange, the company that lost over $10 billion of customers’ funds. SBF is now facing a barrage of financial crime charges.
Sam’s defense in most (or rather all) of his interviews so far has been to deny any knowledge of what was going on at Alameda Research, citing that he was only the CEO of FTX. Therefore CoffeeZilla decided to remove Alameda Research from the picture and focus only on FTX. His goal? To prove that SBF intentionally defrauded his customers.
FTX Terms of Service
The Terms of Service (ToS) states that none of the customers’ assets were going to be used by FTX for any other business and/or trading – a rule they clearly broke. FTX went ahead and loaned Alameda Research a hefty amount of customers’ funds leading to a breach of contract.
In other interviews, SBF managed to defend himself by stating he ‘unknowingly’ commingled FTX customers’ funds with Alameda’s funds.
CoffeeZilla stuck to the main meat of the issue: Whether there is a 1:1 banking for customers’ digital assets. SBF replied by confirming that Alameda and FTX were two separate buckets but they had fungibility – a fancy way of saying funds could be moved between these two entities anyhow. The problem is that this ‘fungibility’ is explicitly not supported by their ToS.
Bottom line: There are no funds left over in FTX to settle withdrawals for customers because FTX allowed generalized withdrawals of funds. There was no separation of funds from margin customers, and spot customers who signed two completely different ToS.
Vincent Munene is a freelance writer and a great blockchain enthusiast. Blockchain has changed his life in terms of financial freedom and in return, he likes to educate people and keep them up to date on everything blockchain. He is a Biochemist by profession and also loves to play the piano.