Former FTX CEO, Sam Bankman-Fried, had prepared a draft Twitter thread in September 2022 to announce the potential closure of his hedge fund, Alameda Research. This draft was created just two months before FTX's collapse. During the trial, FTX co-founder Gary Wang testified that Bankman-Fried was concerned about an upcoming article that would expose the close connection between FTX and Alameda Research.
In the draft thread, Bankman-Fried praised Alameda Research for its role as a vital player in the ecosystem, particularly in turbulent market conditions. He also acknowledged Alameda's success after his departure, highlighting its significant global liquidity and industry guidance. However, Bankman-Fried admitted the hedge fund's major failure of losing track of millions of dollars' worth of Ripple tokens in February 2018 due to accounting negligence.
Bankman-Fried used the draft thread to address claims made by competitors about the excessive ties between Alameda and FTX. He dismissed these claims as distractions and emphasized their lack of truth. Interestingly, Bankman-Fried's plan to wind down Alameda Research was halted due to the firm's substantial $14 billion debt to FTX. When informed about this inability to close Alameda, Bankman-Fried simply acknowledged the situation.
The draft thread concluded with the statement "Alameda Research is dead. Long live FTX." However, Bankman-Fried never implemented the planned closure of Alameda. On the sixth day of the trial, Wang completed his testimony and once again confessed to committing crimes with Bankman-Fried, including wire fraud.
Wang revealed to the jury that they engaged in financial crimes and deceitful practices that ultimately led to the collapse of FTX. As the chief technical officer at FTX and a co-owner of Alameda Research, Wang admitted to wire, securities, and commodities fraud. He disclosed that they illegally withdrew $8 billion from FTX funds through Alameda Research, with Bankman-Fried directing these illicit actions.