How Did Sam Bankman-Fried Loose His Billions FTX Company
On Wednesday, FTX cryptocurrency exchange founder Sam Bankman-Fried made his first public appearance since his business empire collapsed last month, asserting that he “did not ever want to conduct fraud” and again repeating that he didn’t realize the scope of his crypto firms’ problems.
In a live interview at The New York Times’ DealBook conference in Manhattan, Mr. Bankman-Fried said that the fall of his $32 billion firm was caused by “huge management failures” and bad accounting. This has led to legal and criminal investigations.
FTX may have violated the law by lending its clients’ cash to Alameda Research, a trading business owned by Mr. Bankman-Fried. The 30-year-old maintained he didn’t “knowingly commingle cash” via video from FTX’s Bahamas headquarters. “I didn’t know exactly what was going on,” he added.
Mr. Bankman-Fried acknowledged responsibility for the failure. “I messed up,” he said. CEO.
“I Had a Bad Month,” Bankman-Fried Sam Bankman-Fried, creator of the crypto-exchange FTX, claims he is helping stakeholders and not concentrating on criminal culpability. Credit… Winnie Au, The New York Times
FTX imploded nearly overnight after it was unable to satisfy a run on deposits that left the business with an $8 billion hole in its finances. Within a week, the crypto exchange filed for bankruptcy.
The cryptocurrency trading platform lost billions of dollars from traders. FTX-affiliated companies are also struggling. On Monday, the crypto lending startup BlockFi filed for bankruptcy, claiming its connections to FTX.
How Did Sam Bankman-Fried Loose His Billions FTX Company
The crypto exchange crash shocked the industry. Emails and texts reveal that FTX lawyers and executives fought to convince Mr. Bankman-Fried to give up management of his failing firm. BlockFi, a cryptocurrency lender that targeted regular investors seeking a piece of the crypto frenzy, filed for bankruptcy on November 28 due to its financial links to FTX.
FTX helped Mr. Bankman-First Fried’s company, Alameda Research, trade. The two entities’ links are under review. As FTX rose, Mr. Bankman-Fried became a millionaire and wunderkind. The Justice Department and SEC are probing FTX’s financial transfer to Alameda.
The Times and others claimed that Alameda CEO Caroline Ellison warned colleagues last month that the trading business had used FTX client cash for its own trading.
Mr. Bankman-Fried has been slammed. In court documents, FTX’s new CEO, who is overseeing the bankruptcy, said he had never seen “such a total loss of corporate governance” and highlighted “inappropriate management practices.”
Treasury Secretary Janet L. Yellen termed FTX’s collapse a “Lehman moment” for the cryptocurrency industry on Wednesday. She called cryptocurrencies “extremely dangerous investments” and was grateful that their recent volatility had not affected regular banks.
Mr. Bankman-Fried has spoken openly despite potential criminal prosecution. He stated his attorneys admonished him for tweeting apologies in early November. Two days after FTX’s bankruptcy filing this month, he chatted with The Times for more than an hour on how he had managed his business empire while skirting inquiries about his company’s use of client money.
Mr. Bankman-Fried, wearing a black T-shirt, fidgeted during the DealBook conference. He spoke openly against his lawyers’ advice to stay silent and “recede into a hole.” He rejected their advice. “That’s not me,” he said. Talking is my obligation.
FTX-Alameda ties were long criticized. Alameda traded aggressively on FTX, benefiting when other clients lost money, creating a conflict of interest. Mr. Bankman-Fried and Ms. Ellison shared a Bahamas penthouse and were romantically linked.
Mr. Bankman-Fried was worried that he might have a conflict of interest with Alameda, so he stopped participating in its activities.
In addressing the implications of the company’s failure on his personal future, he was modest. “I’ve had a rough month,” he added, laughing.
Mr. Bankman-Fried also indicated that the crisis had lowered his net worth to roughly $100,000. He denied having concealed money. “FTX was my everything.”
FTX was chastised for spending $300 million on real estate in the Bahamas. Mr. Bankman-Fried justified the expenditure during the conference, claiming he was recruiting elite talent to the Bahamas.
He declined to discuss his probable criminal responsibility. “I can think about myself and my future,” he remarked. I doubt it. A tiny group of demonstrators outside the conference site held signs saying Mr. Bankman-Fried “robbed us all.”
As Mr. Bankman-Fried talked, a skyscraper behind the theater displayed advertising. “Buy something,” it said. “Crypto rewards.”