FTX sold fake bitcoins to its customers

The former head of FTX, Samuel Bankman-Fried, admitted this during an interview.

New revelations in the FTX case. At a TwitterSpace in the presence of cryptojournalist Ran Neuner of CNBC in particular, the ex-head of FTX, Samuel Bankman-Fried made an extraordinary statement.

“If I’m a past customer, I’m just trying to find out where my bitcoin deposited today is on FTX. Was that bitcoin fictitious bitcoin on your platform, but the money was left at Alameda Research?” asks Ran Neuner.

First, Samuel Bankman-Fried confirmed a new connection between the FTX and Alameda Research companies, which were to remain separate. Between 2019 and 2020, FTX did not actually have bank accounts, so “some clients” deposited funds at Alameda Research, FTX’s former boss admitted.

“Fictive Tokens”

In return, they received assets (including a “fictitious balance” on FTX) which in reality was just a “series of numbers on a screen”. They did not have a true physical balance in the foreign exchange market as the assets purchased on FTX were not owned by FTX.

“You just let us buy fictitious tokens that didn’t actually exist. That would explain why there weren’t more bitcoins to withdraw (before the bankruptcy, Editor’s note), they were just fictitious. You just let us buy fictitious tokens that didn’t really exist,’ points out Ran Neuner.

Samuel Bankman-Fried’s answer is without appeal.

“Yeah, I think what you’re saying is actually part of what happened,” he admits.

As a reminder, a cryptocurrency trading platform should, in theory, hold as many cryptocurrencies as users have deposited. It is especially in this sense that certain platforms, including Binance, have chosen to publish their “reserve tokens”. We now know that FTX therefore did not have the necessary amount of cryptocurrencies to meet the demand of its customers, which led to its demise.

As a reminder, FTX was considered the second largest cryptocurrency exchange in the world with a valuation of $32 billion. But Friday, November 11 is the platform filed for bankruptcy in the United Stateswhich pushes the cryptocurrency market into the red.

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