Coinbase CEO Knew “Alameda was Printing Money in the Bahamas”

Coinbase CEO Knew “Alameda was Printing Money in the Bahamas”
Image Credit: TechCrunch
15 November 2022


While the markets are still reeling from the FTX scandal that happened last week, questions arise on how this could have happened to FTX , notably after Sam Bankman-Fried files for bankruptcy. These come from VCs in the industry that questioned the mystery why Alameda & FTX had to fundraise during a period when Alameda was known to be extremely profitable.

Prior to the downfall, billionaire SBF was touted as crypto’s next Warren Buffet with a heart of gold in his effective altruism campaigns. He was a known political donor for the Biden party and recently, a co-conspirator for US Regulation monopoly.

“SBF appeared to be bright, credible, competent, but not unethical, I did not think he was capable of fraud, I did not see that coming” said Coinbase CEO Brian Armstrong in discussion of the FTX collapse inside the All-In Podcast.


Read more: FTX Bites the Dust; Files for Chapter 11 Bankruptcy

According to Armstrong, SBF was trying to raise emergency funds after the most recent crypto crash sometime around May. He suspects that Alameda took a loss during the last crypto shakeout that may have put them underwater. However, instead of taking a sensible approach to shutting down Alameda, he orchestrated for FTX to provide a loan to Alameda using FTT tokens as collateral.At that point, FTT was predominantly staked and backed by user funds and that was the first indication of fraud for Armstrong.

Bryan Armstrong recounting the financial flags he saw with SBF but didn’t speak up as he was told that Alameda was ‘printing money’


Armstrong’s next flag was a comparison with FTX in 2019 when Coinbase had made budgets for their venture investment arm after making US$ 7 billion in revenue. That same year FTX only did $US 1 billion in revenue but they were investing in multiple projects. “I had to scratch my head a bunch of times to ask, where did he get all this liquidity? He was buying 9% of Robinhood, making billion dollar investments and making all these donations to political parties.”

However Armstrong did not question or speak up about it at that time when it happened as he had heard from numerous sources that the FTX owned hedge fund and market maker Alameda was “printing money in the Bahamas”. 

In the same podcast, billionaire investor Chamath Palihapitiya recounted his experience with FTX during their US$17 billion dollar round when they pitched to him. Not getting a crystal clear picture on what FTX’s business practices were at that time, he went back to FTX with a two page deck of recommendations to take the investment round to the next step. On that list were recommendations for FTX to form a board, to create dual class stock and to form warranties around affiliated and related party transactions.

“The person that worked at FTX called us back and said go f- yourself”.

Palihapitiya thought that FTX’s arrogance was validated due to the industry sentiment at that time as Alameda was an incredibly profitable money printing machine.

Read more: FTX Demise Proves That “Sovereign Fund-Backed” Means Nothing in Crypto

However not all were charmed with his fame in this tale. At some point in April, SBF had approached Elon Musk to collectively join him in acquiring Twitter.

Speaking on a Twitter Space with over 60 000 listeners, Musk said that there were venture firms and investment banks talking about SBF as the next crypto saviour. However, Musk thought otherwise. “I talked to him for about half an hour, and I knew my bullshit meter was red lining. It was like, this dude is bullshit – that was my impression”. He also took the opportunity to disavow any relationship he has had with SBF by letting listeners know that “he never knew who SBF was.”

The recent events with FTX has caused US lawmakers to go on the offensive to lobby for immediate and aggressive action after the exchange’s implosion in a Nov 13 statement. FTT is now trading at US$1.50, down 22.3% in the 24 hour period and down 93.3% on the 7 day chart.

Neil Liew
Neil Liew

Neil is an all round crypto analyst and former DeFi DAO co-founder. He loves all topics around Blockchain, Fintech & GameFi. While he’s not talking shop, you can find him building web3 products or exploring specialty chocolate in cities around the world.

Newsletter graphic

Info Blocks In Your Inbox.

If you want relevant updates occasionally, sign up for the private newsletter. Your email is never shared.

Subscribe to our newsletter