Scaramucci Reveals Shocking FTX Collapse Details at Consensus

In the Brief:

  • Scaramucci recounts FTX collapse at Consensus
  • Scaramucci learned of FTX's liquidity problem and wanted to help
  • Scaramucci discovered a small group of people had done things they didn't let others in on
  • FTX filed for bankruptcy
  • Two executives and former CEO of Alameda Research pled guilty to fraud
  • Bankman-Fried claims some of the money lost can be recovered

3 - 4 minute read

The collapse of FTX, a once-promising cryptocurrency exchange, has been a hot topic in the crypto world. At the recent Consensus 2023 conference, the founder of Skybridge, Anthony Scaramucci, shared his perspective on what happened at FTX in the final days leading up to the bankruptcy.

According to Scaramucci, most employees of the exchange were probably unaware of what their executives were doing behind closed doors until it was too late. He claimed that FTX CEO Sam Bankman-Fried had made negative comments about Binance CEO Changpeng Zhao, which led to CZ selling his share of FTX tokens. While CZ’s reason for unloading the tokens was “post-exit risk management,” Scaramucci was emphatic in stating that CZ did not cause the bankruptcy of FTX.

Scaramucci revealed that he had heard about a liquidity problem at FTX on Nov. 6 or 7, after returning from a speech in Florida. He thought the exchange had the assets to repay depositors but that these assets could not be sold quickly, threatening to force the exchange to halt withdrawals. Scaramucci wanted to help the exchange, but the liquidity shortfall went from 1 billion to 4.5 billion later in the evening, convincing him that something more serious was going on.

“The way crimes get committed is they get committed by very small groups. It’s very hard to commit a crime like this with a large group of people because what you learn about psychology and sociology, there’s always a person of conscience that comes out and says, “Hey, I don’t want to do this.””

Upon arriving at FTX headquarters in The Bahamas, Scaramucci found a despondent war room, with a small group of people who had done things that they didn’t let the other people into. Scaramucci implied that FTX was a fraud and not merely the victim of liquidity crises brought on by market events. Two of its executives, Gary Wang and Nishad Singh, have pled guilty to fraud, along with Caroline Ellison, the former CEO of Alameda Research. Bankman-Fried has also been charged with fraud, but he has pleaded not guilty and claims that some of the money lost can be recovered.

The Bottom Line

The collapse of FTX is a cautionary tale for traders in the cryptocurrency market. The crypto industry is still in its infancy, and there are risks associated with investing in it. This incident highlights the importance of due diligence and transparency in the industry.

Disclaimer: The content in this article is provided for informational purposes only and should not be considered as financial or trading advice. We are not financial advisors, and trading carries high risk. Always consult a professional financial advisor before making any investment decisions.

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