Who’s Who in the FTX Inner Circle

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FTX’s demise was quick and brutal. In eight days earlier this month, the crypto exchange — developed as a skunk work project at Sam Bankman-Fried’s quantum trading firm Alameda Research — went from being one of the largest and most valuable of all time to a pile of chess bets and worthless chips.

Exactly how the company collapsed is still under investigation. Three US federal agencies – the Department of Justice, the Securities and Exchange Commission and the Commodity and Futures Trading Commission – are investigating the remains, while insiders begin to talk about a company that is running like a house of cards.

New FTX CEO John Ray III has called Bankman-Fried’s crypto trading empire the biggest “failure of corporate controls” he’s seen — a remarkable statement given that Ray has helped found the Enron-Uncover scandal and made his investors pay. More than one million FTX customers have lost money, according to bankruptcy filings.

Although not conclusively proven, it appears that FTX client funds have been put at risk by Alameda traders. It could be standard practice between the two closely related companies for years, or part of an ill-conceived plan to plug holes in the hedge fund’s balance sheet that emerged during the market downturn earlier this year.

And that’s about it: As history unfolds, the world is no more aware of the rationale for the largest crypto crash since Mt. Gox. Sam Bankman-Fried, the disheveled, media-hungry founder, is he a sociopath as some are beginning to claim? Or the product of a worldview called effective altruism, which might encourage people to lie, cheat, or steal their way to fortune, as long as it’s for a good cause?

There were red flags on the way. Brian Armstrong, who inspected the wreckage, said he had always been curious about Bankman-Fried’s burn rate, given the relative size of FTX and Armstrong’s own crypto exchange, Coinbase. Then there are the red flags in FTX’s accounting — including signs of tax evasion and embezzlement (not to mention Prague Metis, FTX’s sleazy accounting firm with an office in Decentraland).

What about the fact that FTX’s C-Suite consisted of mostly inexperienced friends of Bankman-Fried? CoinDesk, which kicked off FTX’s downfall with a brief story on illiquid Alameda assets, has since reported that FTX was mostly controlled by a small circle of close associates. Not much is known about the group, made worse by members taking steps to delete their social media accounts.

In general, SBF’s inner circle were all adherents of actual altruism. They lived close together, in Bahamian properties owned by FTX and Bankman-Fried, and formed romantic relationships. Some may have been made aware of a so-called backdoor between FTX and Alameda that allowed client funds to be transferred without a trace.

CoinDesk collected available information about these people, including Bankman-Fried’s childhood friends and recently hired people. Not everyone listed will be involved in what appear to be scams, but as senior operators they should do everything they can to make sure the full story is told.

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