FTX Profited From Sam Bankman-Fried’s Inflated Coins: Report

Sam Bankman-Fried, the former CEO of the FTX crypto exchange, used his influence in the crypto industry to inflate some coins prices through a coordinated strategy with FTX’s sister company, Alameda Research, a New York Times report claimed on Jan. 18.

As a way to keep FTX and the companies under its umbrella profitable, Bankman-Fried allegedly approached developers behind projects, insisting that they make their trading debuts on the exchange’s platform. Following that, the report claimed, Alameda Research would buy some of these freshly listed coins to raise their value.

Bankman-Fried thenallegedly relied on his popularity to advertise the projects and persuade the crypto community to invest in these “Samcoins.” As a result, Alameda appeared to be in a stronger position than it actually was.

The newspaper compared Bankman-Fried’s strategy with a large-scale pump-and-dump scheme. A stock market operation refers to an increase in stock value by insiders in order to entice retail investors. The insiders then sell their shares and other investors are left with worthless stock.

For developers launching a new coin, Bankman-Fried’s offer was an appealing option, as they could benefit from FTX’s recognition to advertise their tokens and get more attention from potential investors. Among the supposed “Samcoins” were Serum, Maps, Oxygen, Bonfida and Solanaİ

One source interviewed by the NYT also described how Bankman-Fried would offer a select group of investors the chance to buy in coins at low prices, warning that a second opportunity would only be available at higher amounts. Those interested in the offer are alleged to have signed up through an internet spreadsheet.

FTX’s collapse kicked off on Nov. 2, after a leaked balance sheet from Alameda indicated the company’s balance sheet comprised mostly of FTT, a token created by FTX, and other coins facing liquidity issues. A large trading firm holding such a large amount of one asset and Alameda’s relationship with FTX raised questions in the crypto community and ultimately led to a bank run on the exchange.

Source: cointelegraph.com