Disgraced FTX founder Sam Bankman-Fried is facing the public for the first time since his company’s collapse and filing for bankruptcy – and leaving investors millions out of pocket
Disgraced FTX founder Sam Bankman-Fried has said he ‘didn’t try to commit fraud’ and ‘made a lot of mistakes’ as he was grilled publicly for the first time since his company’s collapse and filing for bankruptcy – and leaving creditors billions out of pocket.
Bankman-Fried, who remains in the Bahamas, was interviewed via video link at the New York Times’ DealBook Summit by journalist Andrew Ross Sorkin in Manhattan on Wednesday night.
In response to allegations that he had run a ‘massive Ponzi scheme, he said: ‘I was CEO of FTX and that means whatever happened I had a duty to our stakeholders … to do right by them.’
‘I didn’t do a good job of that, I made a lot of mistakes,’ he added. ‘I did not try to commit fraud on anyone.’
Nevertheless, Bankman-Fried repeatedly tried to distance himself from the implosion of FTX, which was once valued at $32 billion but filed for bankruptcy on November 11 after traders pulled $6 billion from the platform in three days and rival exchange Binance abandoned a rescue deal.
The liquidity crunch at FTX came after Bankman-Fried allegedly secretly moved $10 billion of FTX customer funds to Alameda Research. At least $1 billion in customer funds has vanished, according to Reuters.
Bankman-Fried, who resigned as CEO on the same day as the bankruptcy filing, claimed that he was not aware of any serious issues until November 6, the same day that Binance CEO Changpeng Zhao announced his company would liquidate holdings of FTX’s in-house crypto token.
‘By late on November 6 we were putting together all of the data… that obviously should have been part of the dashboards I was always looking at… and when we looked at that, there was a serious problem there,’ Bankman-Fried said.
Disgraced FTX founder Sam Bankman-Fried spoke via video link at the New York Times’ DealBook Summit on Wednesday night
Andrew Ross Sorkin speaks with FTX founder Sam Bankman-Fried during the New York Times DealBook Summit on Wednesday in New York City
Bankman-Fried added that he was ‘shocked’ by the events of the past few weeks that led to the company’s demise.
Bankman-Fried denies intentionally ‘co-mingling’ client funds with his trading operation
Among the top questions posed in the interview included whether FTX and related hedge fund Alameda Research improperly co-mingled customer funds.
Alameda, which was run by Bankman-Fried’s off-and-on lover Caroline Ellison, allegedly used FTX client deposits to back its trades, an issue that US regulators are probing.
Bankman-Fried said on Wednesday that he ‘didn’t try to co-mingle funds’ between the two companies.
He also tried to distance himself from Alameda — despite owning the company — by saying he ‘didn’t run’ the company because he had a ‘full-time job running FTX’ and didn’t ‘have the bandwith’ to oversee both.
‘I was nervous about conflict of interest between the two,’ he said. ‘I was pretty intentional about not being involved in what was happening at Alameda.’
Bankman-Fried also side-stepped questions on when the co-mingling of funds started.
Bankruptcy documents show that Alameda is owed $4.1 billion for loans it made to ‘related parties,’ which included a $1 billion loan to Bankman-Fried.
Bankman-Fried confirmed he would speak at the event, his first public appearance since declaring bankruptcy, as NY Times columnist Andrew Ross Sorkin said ‘nothing is off limits’
The annual event gathers ‘newsmakers’ across all field of interest, with Sorkin set to tackle the crypto crash with Bankman Fried. Pictured: Sorkin at last year’s summit
Ousted CEO says he is no longer living in lavish $30M Bahamas penthouse he shared with nine colleagues
Bankman-Fried, who was spotted last week by DailyMail.com on the balcony of his $30 million Bahamas penthouse for the first time since his empire imploded, said he is no longer living in the lavish company apartment, which he once shared with nine colleagues.
However, he did say that he was still living somewhere in the Bahamas. Property records show he personally owns a smaller condo, worth up to $2 million, on the north coast of Nassau.
Bankman-Fried denied that he was remaining in the Bahamas, where his country has been based for about a year, to evade the reach of authorities.
‘I’ve thought about coming to the US,’ he said.
Asked about whether he feared personal criminal liability, the former CEO fidgeted silently for a moment before answering: ‘There’s a time and a place for me to think about myself and my own future. I don’t think this is it.’
When pressed on whether his attorneys were in favor of him speaking out publicly, Bankman-Fried responded: ‘They are very much not.’
‘I have a duty to talk, I have a duty to explain what happened,’ he said.
Bankman-Fried insisted that he had not hidden any funds, and that his personal finances had been reduced to ‘close to nothing’ with just one working credit card to his name.
Bankman-Fried was spotted last week by DailyMail.com on the balcony of his $30m Bahamas penthouse. He said he no longer lives there but remains somewhere in the Bahamas
Attendees at the New York Times DealBook Summit look on as Sorokin interviews Bankman-Fried on Wednesday night
Bankman-Fried denies reports of FTX’s wild drug-fueled workplace culture
Bankman-Fried was also grilled on reports that FTX’s company culture was rife with illicit amphetamine use, and marked by tangled romantic relations between employees.
‘There were no wild parties here, when we would have parties we would play board games,’ he insisted.
‘Twenty percent of people would have a quarter of a beer each and the rest of us would not drink anything,’ said Bankman-Fried.
‘I can’t talk about anyone else,’ he added of drug use, saying that he himself had ‘been prescribed various things at various times to help with focus and concentration’ but had only taken the drugs as prescribed.
Throughout the interview, Bankman-Fried characterized his failings at FTX as unintentional, the product of incomplete knowledge and poor foresight, rather than intentionally malfeasant.
‘I obviously wish that I spent more time dwelling on the downsides and less time thinking about the upsides,’ he said.
The implosion of FTX marked a stunning fall from grace for the 30-year-old entrepreneur who rode a cryptocurrency boom to a net worth that Forbes pegged a year ago at $26.5 billion.
After launching FTX in 2019, he became an influential political donor and pledged to donate most of his earnings to charities.
Since FTX filed for bankruptcy, Bankman-Fried has distanced himself from the image he previously projected in media interviews and on Capitol Hill.
He recently told a Vox reporter his advocacy for a crypto regulatory framework was ‘just PR’ and his discussions on ethics within the industry were at least partly a front.
The FTX offices are seen above. Bankman-Fried denied reports that FTX’s company culture was rife with illicit amphetamine use
Earlier on Wednesday, the summit held wide-ranging discussions with ‘newsmakers’, including Meta founder Mark Zuckerberg, Treasury Secretary Janet Yellen, former Vice President Mike Pence, and Ukrainian President Volodymyr Zelensky.
Yellen told Sorkin during a wide-ranging discussion that FTX’s collapse was a ‘Lehman moment’ for the crypto industry. She added that crytpocurrencies were ‘very risky assets’ – and she remained skepitcal about the unregulated industry.
‘It’s a Lehman moment within crypto. And crypto is big enough that we’ve had substantial harm of investors and particularly people who aren’t very well-informed about the risks that they’re undertaking, and that’s a very bad thing,’ she said.
Yellen added that she had not met Bankman-Fried personally. ‘I’ve never met with him. I think I won’t begin right now, either.’
BlackRock CEO Larry Fink also spoke to Sorkin earlier in the day, revealing that the investment firm had invested $24 million in failed FTX. He added that the company’s collapse was the result of bad behavior – not just mismanagement.
Fink said the investments were made on behalf of BlackRock’s clients through a fund, and did not rule out that the firm was misled.
‘Could we have been misled? Until we have more facts, I will not speculate.’