Even the most naive person could not believe that the multi-billion ‘hole’ in FTX’s balance sheet was the result of an accounting error. This was stated by Coinbase co-founder and CEO Coinbase Brian Armstrong.
I don’t care how messy your accounting is (or how rich you are) — you’re definitely going to notice if you find an extra $8B to spend.
Even the most gullible person should not believe Sam’s claim that this was an accounting error.
— Brian Armstrong (@brian_armstrong) December 3, 2022
“I don’t care how messy your accounting is (or how rich you are) — you’re definitely going to notice if you find an extra $8B to spend,” Armstrong said.
In a recent Bloomberg interview, founder and former head of FTX Sam Bankman-Fried explained that the liquidity shortfall at the platform was due to poor accounting. According to him, user funds were sent to the affiliated Alameda Research, as some banks were more inclined to work with hedge funds than with a crypto exchange. All of this led to double counting of certain assets, Bankman-Fried clarified.
However Armstrong doubted the version laid out by the source of the group’s financial problems:
“Those are stolen customer funds that were used in his hedge fund, plain and simple,” Armstrong said.
In November, new FTX chief executive John Ray blamed Bankman-Fried and other exchange executives for providing Alameda with secret preferences. A veteran specialist in corporate restructuring said he had “never seen such a complete failure of corporate governance.” According to him, the company violated accounting rules.
Against the backdrop of the liquidity crunch at FTX, Armstrong said in early November that the platform’s and Alameda’s problems would not affect Coinbase. Even after FTX filed for bankruptcy, the U.S. exchange published in The Wall Street Journal an advertisement with the headline “Trust us”.
— Coinbase (@coinbase) November 17, 2022
But the deteriorating market conditions and the loss of trust triggered by the FTX collapse led Coinbase’s shares to a historic low — on November 21 the stock closed at $41.23. As of writing, they are valued at $47.67 (Nasdaq).
Earlier, Galaxy Digital founder Mike Novogratz criticised Bankman-Fried for his remarks to the media, calling them “nonsense”.
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