Sam Bankman-Fried said that he didn’t intend to commit any fraud or use customer funds to back leveraged bets that went wrong at Alameda Research, a cryptocurrency hedge fund attached to FTX that pushed the exchange to bankruptcy.
Bankman-Fried, speaking at The New York Times DealBook Summit in New York, denied knowingly commingling customer funds to back his crypto trading operation and tried to deflect some of the blame for FTX’s collapse away from himself, saying he was surprised at the size of Alameda’s bets that went wrong.
“I didn’t know exactly what was going on,” Bankman-Fried said via livestream from the Bahamas. “I learned a lot of these things as they were going on.”
The comments came at Bankman-Fried’s first known public appearance since he resigned from FTX and the firm collapsed into the largest-ever bankruptcy by a cryptocurrency platform.
FTX, long a chaotic mess despite its public image of stability, failed after dipping into customer funds to back billions of dollars in risky bets by Alameda, its affiliated trading firm. New managers hired to steer the firm through bankruptcy are only beginning to sift through FTX’s liabilities and hunt down assets that left it before it failed. The firm was plagued by an unprecedented lack of corporate controls, according to its new management, and cryptocurrencies deposited by millions of customers are still frozen on the exchange, with little indication of how much they will get back or when.
Appearing in a black T-shirt and drinking a LaCroix sparkling water during a roughly hourlong interview, Bankman-Fried repeatedly apologised for the collapse of FTX and acknowledged “core management failures” that led to a distraction from the basic business of ensuring that the exchange could protect customers’ money and had sufficient liquidity to meet withdrawals.
He also spoke about an extensive lobbying campaign in Washington designed to advance the firm’s interests, which has drawn scrutiny amid the firm’s collapse.
“There are things I felt like we needed to do for the business; there were things that were crucial for us to be able…to get regulated and get bank accounts,” Bankman-Fried said.
Responding to a question about whether FTX and Alameda were more closely connected than previously understood, Bankman-Fried said 30 November that they were “tied together more than I would have ever wanted it to be.”
READ FTX hires former regulators to investigate what led to the crypto giant’s bankruptcy
Bankman-Fried, however, maintained that he didn’t knowingly commingle FTX client funds. He said he started to get concerned late on 6 November of problems with Alameda’s position on FTX and later that day started to get concerned that “things might end quite badly here.”
“Alameda’s position was big on FTX,” Bankman-Fried said.
Bankman-Fried had faced a rebellion from some Alameda employees years earlier in part over what they viewed as his cavalier approach to risk, The Wall Street Journalreported on 30 November. Since the firm’s collapse, he has maintained his residence in the Bahamas, where he relocated FTX in 2021, and is cooperating with local authorities over the wind-down of its operations in the country, according to court papers.
“Right now, I’m looking to be helpful anywhere I can with any of the global entities that want my help,” Bankman-Fried said on 30 November about his cooperation with regulators over the collapse of FTX.
Customers of largely unregulated crypto platforms lack the safety nets such as deposit insurance that kick in when traditional banks and brokerages go under. The task of cleaning up after FTX and other recent crypto failures has largely fallen to US bankruptcy courts, which have only begun to answer how crypto customers should fare in an insolvency.
Prosecutors in New York and the US Securities and Exchange Commission are examining the firm’s collapse. The alleged misuse of customer funds has exposed Bankman-Fried, who also founded and owns Alameda, to potential criminal liability, according to experts in white-collar criminal law.
Bankman-Fried said 30 November he believed most US exchange customers should be able to recover their locked-up crypto but that FTX’s international customers may not be able to.
“I’m confused why FTX US isn’t processing withdrawals right now,” he said, adding that he believed it should be able to return all assets belonging to American customers.
Representatives for FTX’s new management didn’t immediately respond to a request for comment on 30 November. John J. Ray III, FTX’s new chief executive, has criticised Bankman-Fried for making “erratic and misleading” statements since he stepped away from the firm.
FTX suffered a “complete failure of corporate controls” according to Ray, who said in a bankruptcy-court filing that in his 40 years in the business of restructuring companies, including Enron, he has never seen anything as bad as FTX.
At FTX’s first appearance in bankruptcy court last week, lawyers for the company’s new management said Bankman-Fried ran FTX like a personal fiefdom that had little to no corporate governance or record-keeping.
Ray has also said that Bankman-Fried and his associates had used company money to buy themselves homes in the Bahamas and that management still can’t locate a substantial amount of FTX’s assets.
Bankman-Fried said his lawyers advised against him speaking in public on 30 November, but he said he wanted to try to explain what went wrong at FTX.
“I have a duty to talk to people and to explain what happened,” he said. “I don’t see what good is accomplished by me being locked in a room pretending the outside world doesn’t exist.”
— Jonathan Randles contributed to this article.
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