Sam Bankman-Fried says he ‘never tried to commit fraud’
NEW YORK, Nov 30 (Reuters) – Sam Bankman-Fried, the founder and former chief executive of now-bankrupt crypto exchange FTX, sought to distance himself from suggestions of fraud in his first public appearance since his company’s collapse surprised investors and left creditors facing billions of dollars in losses.
Speaking via video link at the New York Times Dealbook Summit with Andrew Ross Sorkin on Wednesday, Bankman-Fried said he did not knowingly commingle FTX client funds with funds at his own trading firm Alameda Research.
“I never tried to commit fraud,” Bankman-Fried said in the hour-long interview, adding that he personally did not believe he was criminally responsible.
He also denied knowing the full extent of Alameda’s position on FTX, saying it took him by surprise.
The FTX liquidity crisis came after Bankman-Fried secretly transferred $10 billion of FTX client funds to Alameda Research, Reuters reported, citing two people familiar with the matter. At least $1 billion in client funds have disappeared, the people said.
Bankman-Fried told Reuters in November, the company did not “secretly transfer” but rather misread its “confusing internal labeling.”
FTX filed for bankruptcy and Bankman-Fried stepped down as CEO on Nov. 11 after traders withdrew $6 billion from the platform in three days and rival exchange Binance backed out of a rescue deal.
“So much has happened this week,” he said.
Bankman-Fried said he was speaking from the Bahamas and that the interview was against the advice of his lawyers. In the video link, he was seen talking from a room, wearing a black T-shirt and occasionally drinking from a glass.
FTX is facing a wave of investigations. The U.S. attorney’s office in Manhattan in mid-November opened an investigation into how FTX handled customer funds, a source familiar with the investigation told Reuters. The Securities and Exchange Commission and the Commodity Futures Trading Commission have also launched investigations.
Asked if he might come to the United States, Bankman-Fried said that to his knowledge he might and that he would not be surprised if he traveled to Washington for the upcoming congressional hearings on the company’s bankruptcy.
The FTX crash scored a stunning one fall from grace for the 30-year-old entrepreneur who rode the cryptocurrency boom to a net worth Forbes pegged a year ago at $26.5 billion. After launching FTX in 2019, he became an influential political donor and pledged to donate the majority of his earnings to charities.
He said Wednesday that he now has “almost nothing” left and has one working credit card with “maybe $100,000 in that bank account.”
Since FTX filed for bankruptcy, Bankman-Fried has distanced himself from the image he projects in media interviews and on Capitol Hill, telling a Vox reporter that his advocacy for a crypto regulatory framework is “just PR” and his discussions of industry ethics are at least partly anterior.
Bankman-Fried said he was “confused” as to why FTX’s US entity, which was included in the bankruptcy filing, was not processing customer withdrawals. Redemptions are currently paused for both US and international customers.
“To the best of my knowledge, all the US clients and all the US regulated businesses here are, I think at least in terms of client assets, doing well,” he said, adding that derivatives contracts at one of his US subsidiaries were ” fully secured’.
Bankman-Fried said Alameda had built a sizeable position in FTX and that as digital asset prices collapsed this year, Alameda became increasingly vested to the point of no return earlier this month.
“Realistically, (there was) no opportunity for FTX to be able to liquidate this position and generate all that is owed,” he said.
He added that he was “not trying to commingle funds,” but said that when FTX didn’t have a bank account, some customers wired money to Alameda and it was credited to FTX, which likely led to discrepancies.
Bankman-Fried stepped down as CEO of Alameda in October 2021, four years after founding the company, and ceded the role to Carolyn Ellison and Sam Trabuco, who acted as co-CEOs until Trabuco left the firm in August.
For his part, Bankman-Fried said he regretted focusing on FTX’s bigger picture at the expense of risk management, which he said he had paid less attention to in the “last year or two.”
His companies “completely failed” in risk management, he said.
“There was no one person primarily responsible for the position risk of FTX’s clients, and that seems pretty embarrassing in retrospect.”
Reporting by Carolina Mandel and Lannan Nguyen in New York and Manya Saini in Bengaluru; writing by Hannah Lang in Washington; editing by Megan Davies, Deepa Babington and Sam Holmes
Our standards: Thomson Reuters Trust Principles.
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