- Sam Bankman-Fried wanted to expand company operations away from cryptocurrency.
- FTX and Alameda staff enjoyed a luxury lifestyle.
- It remains unclear whether FTX was a scam from the beginning.
The dramatic collapse of FTX and sister firm Alameda Research continues to serve as a stark reminder of the risks involved in crypto investing. The once-promising empire, led by former CEO Sam Bankman-Fried (SBF), was initially hailed as a symbol of crypto’s potentiality, pushing ambitious plans of “effective altruism” globally. However, as former Alameda engineer Adittya Baradwa revealed, beneath that grand vision lay a hubris towards recklessness.
Insider’s Account of FTX’s Grand Vision
Sharing his account of working at Alameda, Baradwa described his first day as exciting due to the mysterious nature of the firm. These feelings were compounded by the nondescript location of the company’s offices, which seemed at odds with the “multi-billion-dollar crypto trading firm” narrative.
In crossing paths with SBF, the former engineer said he witnessed many contradictions. The constant rehashing of the “virtues of decentralized, permissionless finance” conflicted with FTX’s approach of custodying crypto assets, enforcing KYC, and operating a digital asset derivatives exchange.
One day, SBF revealed plans to move the company from its California office to the Bahamas, recounted Baradwa. He also discussed a grand plan to extend operations from cryptocurrency to medicine. The now disgraced CEO’s schemes included setting up a vaccine factory at the new location, eradicating malaria, and conducting biotech research to prevent China from getting ahead in the space.
“He wanted to build a machine - a growing sphere of influence that could break past the walls of that little office in Berkeley and wash over the world as a force for good,” Baradwa said.
Baradwa’s part in these ambitions gave the engineer a unique insight into the executives’ life of luxury, putting him in contact with celebrities along the way.
FTX and Alameda’s Unrealized Plans
Baradwa did not go into the specifics of what he saw behind closed doors but generally spoke about witnessing “careless risk management,” “technical debt,” and “wasteful spending.” Worse still was the reported arrogance displayed in referring to the situation as secondary to the grand plan.
On the Flipside
- It remains unclear whether FTX/Alameda was a scam from the beginning or whether SBF truly had good intentions.
- The US$8 billion hole in FTX and Alameda’s books has further tarnished the reputation of cryptocurrency.
Why This Matters
The shockwaves from what had been a sudden and unexpected collapse of a major crypto institution drew global regulatory scrutiny to the industry. As details continue to surface, the outcome of SBF’s court case is expected to set a precedent for legal activity against illicit crypto firms going forward.
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