Former FTX CEO Sam Bankman-Fried defended Alameda’s use of FTX’s native token FTT as collateral, saying it was “more legit” than most tokens

In an audio interview with Celsius creditor Tiffany Fong on Tuesday, Bankman-Fried addressed Alameda’s margin position on FTX and the events leading up to the exchange’s insolvency.

Bankman-Fried said he believes FTT had real value and has more value than other tokens with sizeable market capitalizations.

“I think FTT was basically more legit than most tokens in some ways. I think its value is more economically underpinned than the average token was,” he said. 

When asked why he felt that way, Bankman-Fried said that FTT’s buy and burn mechanism makes it a token that “at least does something.” According to him, a considerable amount of cash flow went through it and it had utility. 

He went on to compare FTT with “token number 17” on CoinMarketCap, saying that he suspects that token does a lot less than FTT does. 

“Alameda held a lot of it [FTT]. It didn’t hold all of it. Half of it was just totally free-floating,” said Bankman-Fried.

In his view, FTT’s illiquidity wasn’t what caused its market cap to crash down from $8 billion last month to $500 million today. He said that the massive correlation of things being held by the same entity during a free market move was what triggered the implosion. 

“In this specific scenario, where you have a crisis of confidence in that entity, combined with a run on the bank and a total lack of liquidity and credit, where the crash can be extremely correlated between all those assets, [the crash was] extremely large and extremely fast,” he said.