Coinbase CEO Brian Armstrong on Saturday slammed Sam Bankman-Fried’s account of how FTX ended up in an $8 billion hole.
Armstrong said there was no way billions of dollars could have simply slipped past the founder and former CEO of FTX, who graduated from MIT with a degree in physics.
“I don’t care how messed up your accounting is … you’ll definitely notice if you find an extra $8 billion to spend,” he told Twitter. “Even the most gullible person shouldn’t believe Sam’s claim that it was an accounting error.”
Coinbase’s CEO went on to state how he believes the FTX balance discrepancy was created. “This is stolen client money used in his hedge fund, plain and simple,” Armstrong wrote.
After FTX’s collapse, $10 billion in client funds were allegedly secretly transferred to Alameda Research, a hedge fund co-founded by Bankman-Fried, according to reports from Reuters.
But Bankman-Fried, also known as “SBF,” claims it did not “knowingly commingle funds” between FTX and Alameda. He described the $8 billion hole of unclear accounting in a recent interview with Bloomberg.
He explained that funds from FTX users depositing money into their accounts are sent to Alameda because some banks are more willing to work with a hedge fund than with a crypto exchange. This led to double counting of some assets as consumer accounts were credited, he claimed.
FTX has since been described as a company with flawed corporate controls by John Jay Ray III, who presided over the stock market’s bankruptcy as its new CEO. The prominent lawyer, perhaps best known for handling the collapse of Enron, described FTX’s situation as “unprecedented,” and court documents revealed that the exchange had no accounting department.
Coinbase took advantage of the collapse of FTX to present itself as a trusted name in crypto, as the collapse of the SBF empire casts a shadow over the entire industry and its future.
Less than a week after FTX filed for bankruptcy, Coinbase ran a full-page ad in the Wall Street Journal, titled Trust Us. It says that millions of people have recently given their trust and money to others who don’t deserve it.
The quick shutdown of FTX has nevertheless dented the faith of crypto investors when it comes to both the price of digital assets and stocks tied to the industry. After FTX filed for bankruptcy on Nov. 11, Coinbase’s stock price fell 17% to $47.67 from $57.46.