> “You misplaced $8 billion?” I ask.
> “Misaccounted,” Bankman-Fried says, sounding almost proud of his explanation. Sometimes, he says, customers would wire money to Alameda Research instead of sending it directly to FTX. (Some banks were more willing to work with the hedge fund than the exchange, for some reason.) He claims that somehow, FTX’s internal accounting system double-counted this money, essentially crediting it to both the exchange and the fund.
> That still doesn’t explain why the money was gone. “Where did the $8 billion go?” I ask.
> To answer, Bankman-Fried creates a new tab on the spreadsheet and starts typing. He lists Alameda and FTX’s biggest cash flows. One of the biggest expenses is paying a net $2.5 billion to Binance, a rival, to buy out its investment in FTX. He also lists $250 million for real estate, $1.5 billion for expenses, $4 billion for venture capital investments, $1.5 billion for acquisitions and $1 billion labeled “fuckups.” Even accounting for both firms’ profits, and all the venture capital money raised by FTX, it tallies to negative $6.5 billion.
> Bankman-Fried is telling me that the billions of dollars customers wired to Alameda is gone simply because the companies spent way more than they made. He claims he paid so little attention to his expenses that he didn’t realize he was spending more than he was taking in. “I was real lazy about this mental math,” the former physics major says. He creates another column in his spreadsheet and types in much lower numbers to show what he thought he was spending at the time.