FTX profited from Sam Bankman-Fried’s inflated coins: Report
Sam Bankman-Fried, the former CEO of the FTX crypto exchange, used his influence in the crypto industry to inflate some coins prices through a coordinated strategy with FTX’s sister company, Alameda Research, a New York Times report claimed on Jan. 18.
As a way to keep FTX and the companies under its umbrella profitable, Bankman-Fried allegedly approached developers behind projects, insisting that they make their trading debuts on the exchange’s platform. Following that, the report claimed, Alameda Research would buy some of these freshly listed coins to raise their value.
Bankman-Fried thenallegedly relied on his popularity to advertise the projects and persuade the crypto community to invest in these “Samcoins.” As a result, Alameda appeared to be in a stronger position than it actually was.
The newspaper compared Bankman-Fried’s strategy with a large-scale pump-and-dump scheme. A stock market operation refers to an increase in stock value by insiders in order to entice retail investors. The insiders then sell their shares and other investors are left with worthless stock.
Related: ‘There will be many more zeros’ — Kevin O'Leary on FTX-like collapses to come
Pump-and-dump schemes are illegal, and are especially problematic when scammers use false or misleading statements to attract investors to micro and small-cap stocks.
For developers launching a new coin, Bankman-Fried’s offer was an appealing option, as they could benefit from FTX’s recognition to advertise their tokens and get more attention from potential investors. Among the supposed “Samcoins” were Serum, Maps, Oxygen, Bonfida and Solana (SOL).
One source interviewed by the NYT also described how Bankman-Fried would offer a select group of investors the chance to
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