Number Go Up: Inside Crypto's Wild Rise and Staggering Fall

by Zeke Faux

“What’s the difference between these two rows here?” he asked. “You didn’t have eight billion in cash that you thought you had,” I said. “That’s correct. Yes.” “You misplaced eight billion dollars?” I asked. “Mis-accounted,” Bankman-Fried said, sounding almost proud of his explanation. Sometimes, he said, customers would wire money to Alameda Research instead of sending it directly to FTX. (Some banks were more willing to work with the hedge fund than the exchange, for some reason.) He claimed that somehow, FTX’s internal accounting system double-counted this money, essentially crediting it to both the exchange and the fund. That still doesn’t explain why the money was gone. “Where did the eight billion go?” I asked. To answer, Bankman-Fried created a new tab on the spreadsheet and started typing. He listed Alameda and FTX’s biggest cash flows. One of the biggest expenses was paying a net $2.5 billion to Binance to buy out its investment in FTX. He also listed $250 million for real estate, $1.5 billion for expenses, $4 billion for venture capital investments, $1.5 billion for acquisitions, and $1 billion labeled “fuckups.” Even accounting for both firms’ profits, and all the venture capital money raised by FTX, it tallied to negative $6.5 billion. Bankman-Fried was telling me that the billions of dollars customers wired to Alameda was gone simply because the companies spent way more than they made. He claimed he paid so little attention to his expenses that he didn’t reali...