“I didn’t ever try to commit fraud on anyone, I was shocked by what happened this month,” Sam Bankman-Fried (SBF), the founder and former chief executive of the fallen FTX, said at The New York Times’ annual DealBook summit in an interview with Andrew Ross Sorkin.
One of the biggest questions around this debacle is if there was any misuse of funds between Alameda and FTX. For some context, Alameda began struggling to pay lenders back as crypto prices began falling. As a result, it used FTX customer funds to make lenders whole; a move that both showed Alameda’s lack of assets, and triggered part of the crash when FTX customers began the crypto exchange equivalent of a run on the bank.
When pushed by Sorkin, SBF said that he didn’t “knowingly co-mingle funds” between Alameda and FTX. “Given the size of the position, I think it was not our intention, it was, in effect, tied together substantially more than I would have ever wanted to be,” he said.
“A lot of what we ended up doing and focusing on was a distraction from one unbelievably important area that we completely failed on: that was risk,” SBF said. “That was risk management, customer position risk, and frankly, conflict of interest risk.”
The entrepreneur said that he failed to task anyone specifically with oversight of the Alameda and FTX relationship, a misstep that matches up with the fact that FTX, despite being valued at $32 billion, also never had a board of directors. It was his duty, he explained, to have thought about the financial intertwining more — though he offered as an excuse, somewhat ironically, a fear that in looking too closely at the relationship he might be at risk because of his ownership stake conflict in both entities.
Some see FTX’s collapse, and SBF’s mistakes along with the team that conspired alongside him, as a pivotal moment that impacts general trust in the cryptocurrency space -- a world that is already experiencing a winter as Bitcoin and Ethereum prices shake.
SBF, meanwhile, remains a vocal type of vocal, with many surprised that he decided to do the NYT interview in the first place. During the interview, SBF, while sipping (and at least once, spilling) a La Croix in the Bahamas, claimed multiple times that he did not know how certain aspects of the business, from its ties to its eventual bankruptcy, went so wrong. When Sorkin asked what SBF’s lawyers are advising him to do, he said that “they’re very much not” in support of him participating in the interview.
“The classic advice is don’t say anything, recede into a hole,” SBF said, when asked about his lawyer’s perspective on if he should be doing interviews right now. “I don’t see what is accomplished by me sitting locked in a room pretending that the outside world doesn’t exist.”
SBF’s fall from grace is being heavily chronicled, while many wait to see if he will be indicted for the potential crimes in question. The entrepreneur stepped down from his role earlier this month, and has been succeeded by Enron spin-down veteran John J. Ray III. In a filing, Ray said that he never in his career had “seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”
The entrepreneur also addressed his leaked DMs from a conversation with a Vox reporter, in which he declared filing for bankruptcy as one of his biggest regrets. In the text message exchange, he also made flippant comments, going as far as to say “fuck regulators.”
“It was not meant to be a public interview, it was a longtime friend of mine who I stupidly forgot was also a reporter,” he said. “I thought I was speaking in a personal capacity.”
In that Vox interview, he added that regulators "make everything worse" and that they don’t protect customers at all. "In FTX's prime, SBF was a frequent visitor to Capitol Hill, where he advised U.S. legislators on regulations around cryptocurrency. In conversation with Sorkin, SBF said that he spent "probably thousands of hours in D.C.'' meeting with regulators.
Speaking of personal, though, SBF did say he talked to his parents, both of whom are lawyers, about FTX. There have been allegations that his parents were given a Bahamas vacation home using FTX money; “It was not intended to be their long-term property, it was always intended to be the company’s property…and I think that’s where it will end up…I think they may have stayed there.”
SBF says he is not focusing on criminal liability, although that there will be a “time and place” for him to think about himself and his own future. “I’ve had a bad month…but that’s not what happens here…what matters is all the stakeholders in FTX.”
Asked directly about whether he’s remaining in the Bahamas because of a fear of authority intervention should he return to the U.S., Bankman-Fried claimed not to be motivated to stay where he is due to that fear. He instead said that he “could, to [his] knowledge” return to the U.S. at will.
Toward the end of the interview, SBF said that he has very little money left; including only one working credit card. He believes he has about $100,000 left in a bank account.
“I can’t make any promises about anything, but I would have thought that there would be a chance for a pathway forward here that would bring more value to customers than what would happen if you just sold everything out for scraps,” he said. "It's not really in my hands to a large extent, but I would think that it would make sense to be exploring that, because I think there's a chance that customers could end up made a lot more whole, maybe even fully whole if there was a concerted effort."
As Sorkin referenced at the start of his interview, when he read a letter from a reader who lost millions due to FTX's collapse, the company's implosion has vanished some people's entire life savings. It's still not clear if those people will see their money again.
"There have been examples of this in crypto history," SBF said.
He referenced the hack of the crypto exchange Bitfinex, in which 94,000 bitcoins were stolen in 2016. Earlier this year, the DOJ seized the stolen cryptocurrency, and Bitfinex began working with U.S. authorities to help customers get their money back.
In the last month, FTX fell from being the third largest crypto exchange to the 233rd, according to CoinMarketCap data. FTX US division is 243rd. The third largest crypto exchange, behind Coinbase and Binance, is now Kraken -- which itself cut 1,100 jobs earlier today.
Darrell Etherington contributed reporting to this piece.