How Sam Bankman-Fried’s Crypto Empire Collapsed

We won’t pretend to make love after divorce. Zhao wrote on Twitter. “We won’t support people who lobby against other industry players behind their backs.”

When FTX collapsed, Mr. Zhao initially agreed to buy the exchange in what would have amounted to a bailout. But soon the deal fell through, after Binance found problems in the company’s financials. In a Signal group chat that included Mr. Bankman-Fried and other FTX representatives, Mr. Zhao posted a curt note, according to two people familiar with the matter. “Sam, I’m sorry,” he wrote, “but we won’t be able to continue this deal. Way too many issues. CZ.”

Mr. Bankman-Fried scrambled to line up new financing. “I shouldn’t throw stones in a glass house, so I’ll hold back a bit,” he said in a message to employees obtained by The Times. “Except to say: probably they never really planned to go through with the deal.”

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

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

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

As FTX has 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 on Sunday.

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