How Sam Bankman-Fried’s FTX Crypto Empire Collapsed

“We will not pretend to make love after the divorce,” said Mr. Zhao he wrote on Twitter. “We will not support people lobbying against other industry players behind their backs.”

When FTX collapsed, Mr. Zhao initially agreed to buy the exchange in what would be a ransom. But the deal soon fell through, after Binance ran into problems with the company’s finances. In a Signal group chat that included Mr. Bankman-Fried and other FTX representatives, Mr. Zhao issued a brief memo, according to two people familiar with the matter. “Sam, I’m sorry,” he wrote, “but we can’t go forward with this deal. Too much trouble. CZ.”

sir Bankman-Fried set out to secure new financing. “I shouldn’t throw stones in a glass house, so I’m going to back off a little bit,” he said in a message to employees obtained by the Times. “Except to say: They probably never really planned to follow through on the deal.”

Meanwhile, in a meeting with Alameda employees on Wednesday, Ms. Ellison explained what caused the collapse, according to a person familiar with the matter. His voice shaking, he apologized, saying he had let the group down. In recent months, he said, Alameda had taken out loans and used the money to make venture capital investments, among other expenses.

Around the time the crypto market crashed this spring, Ms. Ellison explained that lenders have moved to recall those loans, the person familiar with the meeting said. But the funds Alameda had spent were no longer readily available, so the company used funds from FTX customers to make the payments. In addition to her and Mr. Bankman-Fried said two other people knew about the arrangement: Mr. Singh and Mr. Wang.

The meeting was previously reported by The Wall Street Journal. sir Singh did not respond to a request for comment and Mr. Wang could not be reached for comment. According to a person familiar with FTX’s finances, the exchange has lent up to $10 billion to Alameda.

As FTX crumbled, Mr. Bankman-Fried has been “working constructively with regulators, bankruptcy officials and the company to try to do what’s best for consumers,” he said Sunday.

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