FTX Founder Sam Bankman-Fried Gamed Markets, Says Crypto Rivals

Since his company imploded, Mr. Bankman-Fried has repeatedly denied allegations that he tried to manipulate cryptocurrency markets. In a text message, he compared the company’s efforts to strengthen the price of FTT – by publicly announcing that it would buy large quantities – to share buyback schemes in public companies. And he said the firm’s trading of FTT was designed to keep the market moving smoothly by buying coins when people wanted to sell and selling when they wanted to buy.

“Neither I, nor to my knowledge Alameda, ever intended to manipulate markets,” he wrote.

Signs that Mr. Bankman-Fried orchestrated trades to his firm’s advantage were not hard to see in the crypto world, according to crypto developers who shared their stories on public forums and investors interviewed by The New York Times. The trades at the center of many of these schemes were openly visible on the blockchain, the digital ledger that records every transaction made in the public sphere of cryptocurrencies.

Mr. Bankman-Fried also created FTT to facilitate trading of other coins on FTX. But according to fraud charges filed by the Commodity Futures Trading Commission on Dec. 13, he kept FTT’s value artificially high and then used it as collateral to borrow funds from lending firms. In the 40-page complaint, the commission said Alameda had borrowed as much as $10 billion from various digital lenders against FTT and other holdings.

At one point, Mr. Bankman-Fried became concerned about the “psychological effect of the price of FTT falling below a certain threshold” and ordered Alameda to buy FTT to push the price back up, according to separate fraud charges filed by the Securities and Exchange Commission.

“The question was always: How does FTX have so much money?” so Haseeb Qureshi, a managing partner at Dragonfly, a San Francisco-based venture capital firm to which Mr. Bankman-Fried and his team pitched investment deals, including coin launches.

Mr. Qureshi was not the only one with doubts.

While Mr. Bankman-Fried was raising money to start FTT in mid-2019, Alameda was rumored to be struggling. Ryan Salame, a top FTX executive, told an industry attendee that Alameda was losing money, according to screenshots of text messages seen by The Times; the industry participant did not want to be named because he considered Mr. Salame a friend. (A spokesman for Mr. Bankman-Fried said in a statement that the FTX founder was “quite confident” that Alameda made money in 2019.)

Still, FTT was lucrative for early investors. The coin’s price skyrocketed to nearly $80 in late 2021, about 40 times what it was worth two years earlier. As the broader crypto market surged, Mr. Bankman-Fried cultivated a public persona as a quirky entrepreneur intent on donating all his wealth to charity.