sam bankman fried

The idea that Sam Bankman-Fried was some sort of MIT trading savant is coming undone.

The WSJ now reports that FTX lent billions of dollars worth of customer assets to fund risky bets at Alameda, his trading firm. Now Alameda owes FTX about $10 billion.

That makes it likely that Alameda is now unwinding positions in order to fund the shortfall to FTX. However some of those bets may have been in FTX Token, which has declined 90%.

Bankman-Fried described the move to lend customer deposits to an investor as "a poor judgment call" but it's likely illegal.

The person also says FTX had $16 billion in customer assets. It was hit with $5 billion of withdrawals on Sunday alone, Bankman-Fried reported.

Bankman-Fried also tweeted this week that “FTX has enough to cover all client holdings. We don’t invest client assets (even in treasuries).” He later deleted the tweet.

A separate report from Axios reports that FTX has approached Kraken as a potential rescue partner.

Bitcoin is trading up 11% today to $17,478 on hopes that customer deposits can be protected.