NEW YORK (Reuters) – Sam Bankman-Fred, the founder and former CEO of now-bankrupt cryptocurrency exchange FTX, has tried to distance himself from suggestions of fraud in his first public appearance since his firm’s collapse, surprising investors and leaving creditors facing up. Losses totaling billions of dollars.
Speaking via video link at the New York Times Dealbook Summit with Andrew Ross Sorkin on Wednesday, Bankman-Fried said he never intentionally mixed client funds in FTX with funds in his trading firm Alameda Research.
“I’ve never attempted to commit fraud,” Bankman-Fried said in the hour-long interview, adding that he doesn’t personally believe he has any criminal liability.
He also denied knowing the full extent of Alameda’s position on FTX, claiming it surprised him.
The liquidity crisis at FTX came after Bankman-Fried secretly moved $10 billion of FTX clients’ funds to Alameda Research, Reuters reported, citing two people familiar with the matter. People said at least $1 billion of client funds vanished.
Bankman-Fried told Reuters in November that the company had not “secretly diverted” but had misread its “confusing internal rating”.
FTX filed for bankruptcy and Bankman-Fried stepped down as CEO on November 11, after traders pulled $6 billion from the platform in three days and rival exchange Binance abandoned a bailout deal.
“A lot happened that week,” he said.
Bankman-Fried said he was speaking from the Bahamas and that the interview was against the advice of his attorney. He is seen in the video link speaking from a room, wearing a black T-shirt and occasionally drinking from a mug.
FTX is facing a wave of investigations. A source familiar with the investigation told Reuters that in mid-November the US Attorney’s Office in Manhattan began investigating how FTX handled client funds. The Securities and Exchange Commission and the Commodity Futures Trading Commission have also opened investigations.
When asked if he could come to the United States, Bankman-Fried replied that as far as he knew he could, and that he wouldn’t be surprised if he traveled to Washington for upcoming congressional hearings on the company’s collapse.
FTX’s implosion marked a stunning fall from grace for the 30-year-old entrepreneur who rode the 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 charity.
He said Wednesday that he now has “nearly nothing” left and goes back to 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 has projected in media interviews and on Capitol Hill, telling a Vox reporter that his advocacy for a cryptocurrency regulatory framework was “just PR” and his discussions of ethics within the industry were at least partly on the front page. .
Bankman-Fried said it was “confused” about why the US entity FTX, which is included in the bankruptcy filing, has not processed customer withdrawals. Refunds are currently paused for US and international customers.
“As far as I know, all US clients and all US regulated companies here, I think at least in terms of client assets, are fine,” he said, adding that derivatives contracts at one of its US subsidiaries were “fully secured.”
Bankman-Fried said Alameda has built a large position in FTX and that with digital asset prices declining this year, Alameda has become increasingly more functional to the point of no return earlier this month.
“Realistically, (there was) no capacity for FTX to be able to liquidate that position and generate whatever it was owed,” he said.
He added that he “wasn’t trying to mix funds,” but said that when FTX didn’t have a bank account, some customers sent money to Alameda and credited the money to FTX, which likely led to discrepancies.
Bankman-Fried stepped down as CEO of Alameda in October 2021, four years after the company was founded, and relinquished that role to Caroline Ellison and Sam Trabucco, who served as co-CEOs until Trabucco left the company in August.
For his part, Bankman-Fred said he regrets focusing on the bigger picture at FTX at the expense of risk management, which he said he has paid less attention to over the “past year or two.”
He said his companies “completely fail” in managing risk.
“There was no one mainly responsible for the positional risks of customers on FTX, which was a very embarrassing feeling later.”
Additional reporting by Carolina Mandel and Lanan Nguyen in New York and Manya Saini in Bengaluru; Writing in Washington, Hannah Lang; Editing by Megan Davies, Deepa Babbington and Sam Holmes
Our Standards: The Thomson Reuters Trust Principles.
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