Coinbase CEO Denies FTX ‘Accounting Error,’ Claims Funds Were Clearly ‘Stolen’

Coinbase CEO Brian Armstrong slammed Sam Bankman-account Fried’s of how FTX got into a $8 billion hole on Saturday.

Armstrong claims that billions of dollars could not have passed FTX’s founder and former CEO, who graduated from the Massachusetts Institute of Technology with a degree in physics.

“I don’t care how sloppy your books are… “You’ll definitely notice if you find an extra $8 billion to spend,” he said on Twitter. “Not even the most deluded person should believe Sam’s claim that this was an accounting error.”

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.

Even the most gullible person should not believe Sam’s claim that this was an accounting error.

— Brian Armstrong (@brian_armstrong) December 3, 2022

The CEO of Coinbase went on to explain how he believed the mismatch on FTX’s balance sheet came about. “It’s simply stolen customer money used in his hedge fund,” Armstrong wrote.

It’s stolen customer money used in his hedge fund, plain and simple.

— Brian Armstrong (@brian_armstrong) December 3, 2022

According to Reuters, following FTX’s demise, $10 billion in customer funds were allegedly secretly transferred to Alameda Research, a hedge fund co-founded by Bankman-Fried.

However, Bankman-Fried, also known as “SBF,” has stated that he did not “knowingly mix funds” between FTX and Alameda. In a recent interview with Bloomberg, he blamed the $8 billion hole on poor accounting.

He explained that funds deposited into FTX accounts were sent to Alameda because some banks preferred to work with a hedge fund rather than a crypto exchange. He claims that as users’ accounts were credited, some assets were double-counted.

John Jay Ray III, who oversees the exchange’s bankruptcy as its new CEO, has since described FTX as a company with faulty corporate controls. The prominent lawyer, perhaps best known for handling the Enron debacle, called the FTX situation “unprecedented,” and court documents revealed the exchange lacked an accounting department.

Coinbase has used the demise of FTX to position itself as a trustworthy name in cryptocurrency, as the collapse of SBF’s empire casts a pall over the entire industry and its prospects.

Coinbase ran a full-page advertisement in the Wall Street Journal titled “Trust Us” less than a week after FTX declared bankruptcy. It claimed that millions of people had recently placed their trust and money in the hands of people who did not deserve it.

FTX’s abrupt closure has tainted investors’ faith in crypto, affecting both the price of digital assets and equities linked to the industry. Coinbase’s stock price has dropped 17% to $47.67 from $57.46 since FTX filed for bankruptcy on November 11.