Illustration by Stephanie Jones for Forbes; Photo by Virgile Simon Bertrand for Forbes
With customers, investors and, potentially, law enforcement closing in, the fate of crypto wunderkind-turned-pariah Sam Bankman-Fried may rest on two key questions: What did he know about Alameda Research, and when did he know it?
Since the stunning, early November collapse of both Alameda, a secretive crypto hedge fund Bankman-Fried cofounded in 2017, and FTX, a crypto exchange he cofounded in 2019 and grew into one of the world’s largest, speculation has run rampant about how the two operations were intertwined and what chain of events drove both businesses into bankruptcy.
Bankman-Fried, in a series of high-profile media appearances this week, has begun offering his own working theory: Alameda took on far too much leverage to make risky investments on the FTX platform, and FTX failed to recognize and prevent it. A key claim: that Bankman-Fried himself didn’t really know what Alameda was up to.
“I was frankly surprised by how big Alameda’s position was,” Bankman-Fried said at The New York Times’ DealBook Summit on Wednesday. “Alameda is not, like, a company that I monitor day-to-day,” he claimed to New York magazine in an article published Thursday. “It’s not a company I run. It’s not a company I have run for the last couple years. And Alameda’s finances I was not deeply aware of. I was only surface-level aware of Alameda’s finances.”
Just how “surface-level” remains to be uncovered, as a bankruptcy team picks through the wreckage to retrace what occurred. But a look inside Bankman-Fried’s discussions with Forbes provides an early baseline of Bankman-Fried’s awareness of Alameda’s dealings: Since January 2021, Bankman-Fried has sent Forbes details of some of Alameda’s major holdings at least five times in response to questions about his net worth, including explaining the specifics of certain transactions and updating the number of FTT, Solana and Serum tokens Alameda held–as recently as late August.
Most of the world’s billionaires would rather not discuss their wealth. Not Bankman-Fried, who Forbes first approached about the subject in January 2021. “[H]appy to give an outline,” he wrote in an email. Later that week, he sent a handful of documents showing his ownership stakes in FTX (around half) and Alameda (90%), screenshots of wallets that held cryptocurrencies–and a Google Sheet listing his assets line-by-line, including details of his FTX equity plus holdings of 67.8 million Solana tokens, 193.2 million FTT tokens and 3 billion tokens of Serum.
Two months later, when Forbes was updating estimates for our annual World’s Billionaires list, Bankman-Fried updated the spreadsheet. Crypto prices were on the rise, plus Alameda had upped its share of FTT tokens, to 195.8 million. “Alameda funds under management, approx.” reads one line: $32,534,779,809. A separate column, listing only tokens that were unlocked–meaning able to be transacted–pegs Alameda’s total funds at a more modest $14.7 billion.
Updates like this arrived periodically–practically whenever Forbes asked for them. In September 2021, Bankman-Fried added a new tab to the Google Sheet. Alameda’s funds under management had grown to $37.6 billion, $16.8 billion counting only unlocked tokens. The business had made some Solana trades, he explained, and the number of FTT tokens on his balance sheet had also shifted. Bankman-Fried was well versed in the details: “[W]e used ~20mm FTT tokens as part of the funds to purchase back FTX equity from Binance (causing the decrease), and then subsequently repurchased that FTT in the market,” he wrote to Forbes. “So, as of now (a bit different from a few weeks ago!), we’re back up to 186,442,198 unlocked FTT (after having sold off a bit on the recent rally).”
September 2021: With crypto markets riding high, Bankman-Fried created this Google Sheet for Forbes, pegging his net worth at $26.3 billion, including $17 billion in wealth tied up in Alameda. We estimated his fortune to be $22.5 billion around then.
Forbes
In March 2022, Bankman-Fried updated the spreadsheet again with more specifics about his share of what Alameda owned. FTT holdings were down to 176 million tokens; Solana was down to 53 million. In late August, about a month before Bankman-Fried’s empire began to crumble, he again walked Forbes through his net worth, providing a capitalization table of FTX and FTX U.S.’ biggest shareholders. A new tab in the Google Sheet showed Alameda’s holdings too, with its investments in Solana, Serum and FTT unchanged at 53 million, 3 billion and 176 million, respectively. The total value of his share of Alameda’s funds under management, per Bankman-Fried at the time: $8.6 billion, or $6.4 billion counting only unlocked tokens. By then, there was much more going on below the surface, with Alameda likely in deep trouble, suffering from trading losses on highly-leveraged bets.
August 2022: Just a month before his empire crashed, Bankman-Fried created this Google Sheet for Forbes. He marked his own wealth at $26.5 billion. Forbes went with $17.2 billion.
Forbes
The level of detail Bankman-Fried provided to Forbes over the years shows that he had detailed knowledge of some of Alameda’s holdings and at least some knowledge of the transactions it was making, especially in 2021, despite stepping back from running the hedge fund after cofounding FTX in 2019. Bankman-Fried long insisted the two businesses operated independently of one another, though he is a shareholder of both.
It remains unclear how involved he was in Alameda’s operations, and his conversations with Forbes don’t necessarily show that he was aware of all of the hedge fund’s activities–the snapshots he sent were clearly incomplete, listing only major holdings, and he explained only a few major transactions, such as token purchases in 2021. Bankman-Fried has said Alameda ran into trouble in recent months. He declined to comment for this story.
Forbes based much of its estimate of Bankman-Fried’s net worth, which peaked at $26.5 billion in late 2021 but now appears to be close to zero, on the value outside investors like Sequoia Capital and Singapore government fund Temasek ascribed to FTX and its U.S. operations. We applied sizable discounts to Bankman-Fried’s self-reported Alameda holdings. In August, Forbes pressed Bankman-Fried for more details on his assets and liabilities, including a breakdown of Alameda’s balance sheet–both its investments and any debts it owed. “[W]orking on it!” he wrote in an email, opening the possibility that he went digging into Alameda’s books at least as recently as late August, more than a month before he said this week he became aware of what the business was up to. “[W]ill see what I can get,” Bankman-Fried wrote later that day, “a bunch is spread between a ton of wallets…” He never sent any more details.