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After nearly three weeks in the dark from the media, former FTX chief Sam Bankman-Fried is finally making public appearances.
On Thursday, he partook in a live Twitter space to take questions directly from the crypto community. Here are the highlights from his interview and questioning.
- Sam Bankman-Fried said he is making media appearances in the name of transparency. He believes the community deserves answers.
- SBF claimed that he had little relationship with Alameda Research, over worries about conflicts of interest. The trading desk filed for bankruptcy alongside FTX last month, after allegedly being used to trade customer assets.
- SBF admitted that he did have a relationship with its CEO Caroline Ellison.
- The former billionaire did not directly answer whether customer assets were directly backed 1:1. He said customer balances were always equal to FTX’s assets, but that certain balances at the exchange had negative balances.
“I wish I had paid a lot more attention to risk management. It was really an embarrassing mistake for me to have made,” he continued.
- One questioner asked whether Alameda was allowed to remove assets from FTX. SBF said they and other firms could take out funds, including more than they owned, as long as they provided sufficient collateral.
- However, Alameda had collateralized assets like FTT – which collapsed by 90% at the start of November.
- According to SBF, the collapse was so fast that FTX could not liquidate Alameda’s margin position fast enough. This caused FTX to lose billions of dollars.
- As for FTX US, SBF said he had only filed the US exchange for bankruptcy due to being pressured by others. According to him, FTX US is fully solvent and could be opened today.
“FTX US was in fact a segregated business,” he said. “That doesn’t take away from anything that happened on the international platform, but at least its something.”
- According to the former billionaire, Alameda’s trading volume had declined to 2% of FTX’s volume by the year 2022. However, it comprised a far more sizable portion of FTX’s margin position.
- Regarding co-mingling of funds, SBF admitted that it was likely customers’ spot deposits were co-mingled with futures deposits. He suspects that some customers were effectively buying “notional Bitcoin”.
- Sam Bankman-Fried avoided commenting on his tweet about a “sparring partner” made on November 10th. Most assume he refers to CZ, who many credits with having sparked FTX’s downfall with a timely tweet.
- He also lacked an answer for concrete steps his company might be taking to recover customer funds.