As Sam Bankman-Fried’s FTX continues to unravel, Elon Musk and other crypto bigwigs have begun speculating on the reasons behind the epic crash of what used to be the second-largest cryptocurrency derivatives exchange by trading volume.
Sharing Allysia Finley’s piece on what Bankman-Fried and former U.S. President Donald Trump have in common, the Wall Street Journal came up with a tweet Tuesday on why Bankman-Fried’s empire collapsed.
“FTX failed because Sam Bankman-Fried’s supporters lost confidence in him. That may be how Donald Trump finally crashes and burns too,” the tweet said, quoting lines from the article.
However, “Chief Twit” Musk disagreed with the tweet, noting, “Yeah umm … that is definitely not the reason it failed.”
Musk did not elaborate on his comment, but it can be recalled that he was able to talk to Bankman-Fried when the former FTX chief executive officer (CEO) approached him and expressed interest in helping Musk acquire Twitter in April.
Following FTX’s spectacular collapse, Musk said Bankman-Fried “set off” his “BS detector.” When Musk joined Twitter Spaces on Nov. 12, a day after the exchange filed for bankruptcy, he voiced his opinion about the former FTX CEO.
“To be honest, I’d never heard of him,” Musk shared. “But then I got a ton of people telling me he’s got, you know, huge amounts of money that he wants to invest in the Twitter deal. And I talked to him for about half an hour. And I know my bulls–t meter was redlining. It was like, this dude is bulls–t — that was my impression.”
Aside from Musk, other crypto personalities like former Microstrategy CEO and Bitcoin evangelist Michael Saylor also shared his thoughts on what may have caused the FTX implosion. Saylor sarcastically noted, “Maybe FTX failed because Sam stole all the money?”
Ripple chief technology officer David Schwartz also commented on the matter. “This kind of thing will always happen unless it cannot happen,” he wrote. “The temptation is irresistible. That is one of the most important lessons of FTX. But most people will actively choose not to learn this lesson because of, among other things, the elephant in the room.”
Bankman-Fried stepped down from his post as CEO of FTX on Nov. 11. He was accused of fraud and mismanagement of funds by crypto market traders, investors and participants.
FTX is currently run by its new CEO, John Ray II, who, after taking the helm, said, “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”
“From compromised systems integrity and faulty regulatory oversight abroad to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented,” the new FTX CEO added.