- 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 cryptoโs potentiality, pushing ambitious plans of โeffective altruismโ globally. However, as former Alameda engineer Adittya Baradwa revealed, beneath that grand vision lay a hubris towards recklessness.
Insiderโs Account of FTXโs 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 companyโs offices, which seemed at odds with the โmulti-billion-dollar crypto trading firmโ narrative.
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In crossing paths with SBF, the former engineer said he witnessed many contradictions. The constant rehashing of the โvirtues of decentralized, permissionless financeโ conflicted with FTXโs 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 CEOโs 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.
โHe 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,โ Baradwa said.
Baradwaโs part in these ambitions gave the engineer a unique insight into the executivesโ life of luxury, putting him in contact with celebrities along the way.
FTX and Alamedaโs Unrealized Plans
As revealed in November 2022, behind the glitz and glamor lay a house of cards built on allegations of bribery, illegal political donations, and misuse of customer funds.
Baradwa did not go into the specifics of what he saw behind closed doors but generally spoke about witnessing โcareless risk management,โ โtechnical debt,โ and โwasteful spending.โ 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 Alamedaโs 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 SBFโs court case is expected to set a precedent for legal activity against illicit crypto firms going forward.
Discover the latest in the criminal case against FTXโs former CEO here:
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