• Bitmex Co-Founder Arthur Hayes has criticized former FTX CEO Sam Bankman-Fried for not liquidating his hedge fund Alameda.
• Hayes says that Bankman-Fried’s explanation of Alameda’s failure is misdirection and that it does not matter what was in their portfolio.
• Hayes insists that Bankman-Fried should explain why he thought it was a good idea to give his hedge fund an account with the liquidation feature turned off.
Bitmex Co-Founder Arthur Hayes had some choice words for former FTX CEO Sam Bankman-Fried this past Friday. In a tweet, Hayes criticized Bankman-Fried for not liquidating his hedge fund Alameda after Bankman-Fried published his first blog post on his new Substack newsletter.
„All this talk about what Alameda did is misdirection,“ Hayes insisted. „It doesn’t matter how they hedged or didn’t hedge, or what dogsh** was in their portfolio.“ Hayes then told Bankman-Fried if he truly wanted to explain what happened, he should tell the community why he thought it was a good idea to give his hedge fund an account with the liquidation feature turned off.
The Bitmex co-founder’s criticism of Bankman-Fried comes after the former FTX CEO wrote a blog post in which he discussed the failure of his hedge fund. In the post, Bankman-Fried said that „Alameda failed to sufficiently hedge its market exposure“ and „an extreme, quick, targeted crash precipitated by the CEO of Binance made Alameda insolvent.“
Caroline Ellison, former CEO of Alameda, has explained that executives had implemented special settings on Alameda’s FTX.com account that allowed them to turn off the liquidation feature. This meant that even if the hedge fund was in danger of becoming insolvent due to market movements, the liquidation feature would not be activated.
Hayes has significant knowledge about cryptocurrency derivatives exchanges, as Bitmex was one of the largest since its inception in 2014. He believes that the exchange should never lose money if a customer gets liquidated.
In response to Bankman-Fried’s post, Hayes tweeted, „The exchange should never lose money if a customer gets liquidated. There is no excuse [for] giving [your] hedge fund Alameda an account with liquidation turned off. All this talk about what Alameda did is misdirection. It doesn’t matter how they hedged or didn’t hedge, or what dogsh** was in their portfolio.“
The Bitmex co-founder had some harsh words for Bankman-Fried, but it is clear that he believes that the former FTX CEO should be more transparent about what happened. Hayes believes that Bankman-Fried should explain why he thought it was a good idea to give his hedge fund an account with the liquidation feature turned off. This could provide some valuable insight into the failure of Alameda and help prevent similar issues from happening in the future.