Sam Bankman-Fried, the former FTX chief now facing federal fraud charges, channelled roughly one billion dollars into Kazakh bitcoin miner Genesis Digital Assets through Alameda Research, the hedge fund that sits at the epicentre of FTX’s Chapter 11 proceedings – according to filings released in Delaware bankruptcy court.
Bankman-Fried accepted a seat on the Genesis board on 1 October 2021. He relinquished the position on 10 November 2022, one day before FTX filed its petition. Creditors now queue for repayment.
Bankman-Fried has used social media to defend his stewardship of FTX. In a Substack post he declared, âI didnât steal funds.â
Alameda wired four tranches to Genesis between August 2021 and April 2022: one hundred million dollars in August 2021, five hundred and fifty million dollars in January 2022, two hundred and fifty million dollars in February 2022, and two hundred and fifty million dollars in April 2022.
Alameda deployed roughly half of the capital to fund data centre construction, power purchase agreements, and ASIC procurement. The remainder purchased shares directly from two Genesis co founders. Bankman-Fried’s board tenure ran from 1 October 2021 until 10 November 2022.
Genesis failed to deliver the returns its name suggested. Bitcoin’s price collapsed from sixty eight thousand dollars in November 2021 to sixteen thousand dollars one year later. Electricity tariffs in Kazakhstan doubled during the same period. Network hash rate reached an all time high – compressing margins. Anthony Scaramucci’s SkyBridge Capital invested sixty two million dollars in June 2022 and by September had sold fifty nine per cent of its position – according to SkyBridge’s Form ADV.
Kazakhstan’s Ministry of Energy imposed rolling blackouts and a sector specific surcharge on bitcoin miners in late 2021. Genesis relocated the majority of its hash power to Texas but also North Dakota – incurring freight, customs along with re-assembly costs that further eroded cash flow.
Bankman-Fried, released on a two-hundred-and-fifty-million-dollar bond secured by his parentsâ Palo Alto home, awaits trial in the Southern District of New York. On Substack he attributed FTX’s collapse to âa market crash Alameda failed to hedge against,â likening the loss to those suffered by Three Arrows Capital besides Voyager Digital.
âI didnât steal funds, and I certainly didnât stash billions away,â Bankman-Fried wrote. âAlameda lost money because of a market crash it was not adequately hedged for – as Three Arrows and others have this year. FTX was impacted, as Voyager and others were earlier.â
Nishad Singh, FTX’s former director of engineering, entered a proffer session with federal prosecutors in Manhattan. The agreement grants him limited immunity. Singh has not been charged. Former Alameda CEO Caroline Ellison or FTX co founder Gary Wang previously signed cooperation agreements with the Department of Justice.