Coinbase CEO Brian Armstrong says SBF’s messy accounting excuse for FTX collapse doesn’t explain $8 billion loss: ‘Even the most gullible person should not believe Sam’s claim that this was an accounting error’

December 5, 2022, 5:59 PM UTC
A picture of Coinbase CEO Brian Armstrong
Coinbase CEO Brian Armstrong finds it “baffling" that Sam Bankman-Fried is “not in custody already.”
Courtesy of Coinbase

Ever since Sam Bankman-Fried’s crypto exchange FTX melted down last month, one of the biggest questions is what exactly happened to $8 billion that seems to have gone missing. 

Bankman-Fried, also known as SBF, has said that poor management of company accounts led to the collapse and bankruptcy of FTX.

But another major crypto founder thinks SBF’s reasoning needs to be taken with a grain of salt.

Brian Armstrong, CEO of Coinbase, a crypto exchange platform, wrote in a tweet on Dec. 3 that he wasn’t buying the accounting practices excuse. 

“I don’t care how messy your accounting is (or how rich you are)—you’re definitely going to notice if you find an extra $8B to spend,” he wrote. 

“Even the most gullible person should not believe Sam’s claim that this was an accounting error,” he added in a follow-up tweet.  

Armstrong went on to speculate about what happened to the missing money, saying he believed “stolen” customer money was used for Alameda Capital, SBF’s trading company.

FTX did not immediately respond to Fortune’s request for comment.

FTX filed for bankruptcy on Nov. 11. It is now the subject of an investigation by the Department of Justice and the Securities and Exchange Commission. Some reports have surfaced that customer funds from FTX were used in trading by FTX’s sister firm, Alameda Research, which has also filed for bankruptcy. SBF said in an interview last week that he did not “knowingly comingle funds,” and said that the collapse was due to a “failure of oversight.”

SBF was hailed as the white knight of the crypto when he swooped in to bail out several crypto companies during the downturn earlier this year. No longer a billionaire, he was worth $26 billion at his peak. With the collapse of FTX, the 30-year-old founder has said in interviews that he believes his fortune to be somewhere in the range of $100,000.

Armstrong has been vocal over the past few weeks about how FTX’s bankruptcy could impact the broader crypto landscape, which was already in the middle of a Crypto Winter when FTX collapsed last month.

Last week, Armstrong said that he found it “baffling” that SBF was not already in police custody. “The DOJ or somebody should be able to make—just based on his public statements, I think there’s a very open-and-shut case for fraud,” he said at a crypto conference on Nov. 29.

In a Twitter discussion last month, Armstrong said regulators also had a role to play in the FTX bankruptcy.

“The lack of regulatory clarity, I think, in the major markets actually pushed a lot of this stuff offshore into these jurisdictions, which didn’t help,” Armstrong said. He added that he hoped regulators would consider the FTX episode reason enough to work together on addressing the problems cryptocurrencies face.

But Armstrong said in that same discussion that despite the FTX meltdown, all is not lost for crypto.

“A lot of times these crises pass,” he said.

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