The Sam Bankman-Fried trading shop was particularly treated on FTX for years

Alameda Research has been able to cross the normal credit limits on the FTX exchange since their beginnings, Sam Bankman-Fried said in a concession, which shows how the trading business of the former billionaire years before the cryptocrisy in 2022 enjoyed a preferred treatment towards customers.

In an interview with the Financial Times, the 30-year-old described the oversized role that Alameda played in the introduction of the stock exchange in 2019 and how it had access to exceptionally high borrowing from FTX from the start.

Bankman-Fried said that "when FTX started for the first time", Alameda had "pretty large borders" for borrowing from the stock exchange, but he "absolutely" wanted the trading company to subject the same standards as other customers.

When asked whether Alameda still had larger limits than other customers, he said: "I think that could be true." How much greater the limits of Alameda were than that of other customers, he did not say.

ftx and Alameda were publicly presented as different units to avoid the impression of conflicts of interest between the stock exchange, which processed customer business worth several billion dollars a month before their collapse, and to avoid Bankman-Fried's own trade

Bankman-Fried's comments illuminate the long-standing special treatment of Alameda. The close connections between the companies and the large borrowing from Alameda from FTX played a key role in the spectacular collapse of the stock exchange, which was once one of the largest crypto replacement places and was estimated by investors such as Sequoia and Blackrock to $ 32 billion.

Bankman-Fried, previously one of the most respected personalities in the industry for digital assets, apologized for mistakes that made 1 million creditors confronted with great losses in funds that they had entrusted to FTX, but denied that they have intentionally abused customers' assets.

Bankman-Fried said that the origins of the big credit limits for Alameda were the result of the early role of the commercial business as the main supplier of liquidity to FTX before attracting other financial groups.

ftx handling, like other large offshore trading places, large amounts of derivatives that enabled dealers to enlarge their bets with borrowed agents-but as a rule, professional companies are necessary so that the market works smoothly.

"If you leaf through by 2019 when FTX started for the first time, Alameda had 45 percent of volume or something on the platform at that time," said Bankman-Fried. "It was basically a situation in which the Alameda account no longer had a capacity to enter into new positions, this would lead to risk problems for the platform because we didn't have enough liquidity providers. I think it was therefore quite large."

this year, he said, Alameda made up around 2 percent of the trading volume and was no longer the most important liquidity provider on the stock exchange. Bankman-Fried said he regretted that he has not checked the treatment of the retail company again to ensure that it is subject to the same credit restrictions as other similar companies that work on the stock exchange.

ftx awarded dealers so that they could complete large bets on crypto with just a small initial effort, known as a trade on margin. The great commitment of FTX at Alameda was one main reason that the weakness in the balance sheet of the trading company caused a financial crisis that both companies grasped.

Bankman-Fried estimated Alameda's liabilities to around $ 10 billion compared to FTX when both companies registered bankruptcy in November.

"From the perspective of the volume, the income and liquidity, the stock exchange was practically independent of Alameda. Obviously, this has not been true in terms of positions or balances at the event location," said Bankman-Fried.

John Ray, the experienced insolvency administrator, who led FTX on bankruptcy, criticized his former leadership that she had failed to keep Alameda and FTX separated. In court files, he pointed out a "secret exception of Alameda from certain aspects of the auto liquidation protocol from ftx.com".

The automatic liquidation or closure of souring positions was an important principle of the FTX risk management procedures and a core of their suggestions to change parts of US financial regulation. When the trade of a typical customer began to go under water, FTX's liquidation mechanism should begin to consume the Marge of the account to protect the trading center from a single trade that causes a loss for the stock exchange.

Bankman-Fried said, however, that there was "possibly a liquidation delay for Alameda and possibly other large dealers. He said he was "not sure" whether Alameda was subject to the same liquidation protocol as other traders on the stock exchange and that the treatment of the account of the trading company was "in the river".