- Sam Bankman-Fried promised big profits in 2018 when he called for urgent cash, reports say.
- According to The Wall Street Journal, Alameda Research was struggling with a failing algorithm.
- The outlet said Bankman-Fried’s troubles began long before the collapse of FTX and Alameda in 2022.
FTX co-founder Sam Bankman-Fried has promised potential lenders up to 20% returns in an attempt to save the crypto empire from the 2018 crisis, reports say.
wall street journal It describes problems with FTX’s sister company Alameda Research, which it says goes back several years before it filed for bankruptcy in late 2022.
Citing an anonymous source, the outlet said Alameda was already struggling in 2018.
A cryptocurrency hedge fund needed relief after an automated trading algorithm lost money on a series of inaccurate calls, the WSJ said.
The problem prompted Bankman-Fried to seek additional financing to keep Alameda alive, according to the report.
According to the journal, he promised returns as high as 20% annually in exchange for cash or crypto loans, but gave few details.
Alameda survived the crisis and remained in business, while Bankman-Fried founded FTX in mid-2019.
After both lost billions of dollars before failing spectacularly in late 2022, lawsuits began against Bankman Freed and others following accusations that FTX and Alameda misused customer funds.
Bankman-Fried is appear in court on January 3 To answer federal charges related to the collapse.
He is expected to make a plea bargain after being charged with eight counts of criminal charges. includes fraudulent use of FTX Funds to purportedly
According to prosecutors, his victims were FTX lenders and customers, who have accused him of securing funds through fraud.
A former colleague of his has already struck a plea bargain.
FTX Filed for Chapter 11 bankruptcy protection on November 11 After imploding wipe out billions of dollars worth of customer depositsBankman Fried On the same day, he resigned as representative director..
A Bankman-Fried representative did not immediately respond to an Insider request for comment outside of normal business hours.