FTX Founder Denies “Fraud” in First Public Interview Since Collapse

Last Updated on 12/02/2022 by てんしょく飯

Sam Bankman-Fried, former CEO of the failed cryptocurrency exchange FTX, gave a public interview to the New York Times (NYT) on November 30.

He claimed that FTX’s collapse was not caused by fraud, but by a number of mistakes he made.

FTX is facing allegations that it misappropriated billions of dollars in client funds to bail out its sister company, trading firm Alameda Research, a company that has been accused of fraudulent practices.

Bankman-Fried admitted that as head of the FTX, he “didn’t do a good job,” and said there were enormous accounting errors. He insisted, however, that he “never tried to commit fraud” and said he was “shocked” by the exchange’s collapse in early November.

In response to suggestions that his relationship with FTX and Alameda was improper, he said that although the two companies were co-founded by himself, “I did not run Alameda,” and claimed that he “did not know exactly what was going on.”

Bankman-Fried also said that he was “not prudent enough” in assessing the risks of the loan to Alameda and claimed that he was not aware of the “risk of extreme price declines” of the cryptocurrency.

He said the company “completely failed” to manage risk, adding that FTX did not have a dedicated person to verify the risks taken by its customers.

John Ray, the newly appointed CEO handling FTX’s bankruptcy, said in a court filing last month that he had “never seen such an appalling failure of corporate governance and lack of financial information in a career spanning more than 40 years.” Bankman-Fried, however, insisted that “an enormous amount of energy was expended on compliance.”

He said he had “no clear explanation” for the suspicious transfer of $515 million in funds after the FTX’s bankruptcy filing, which he said “may have been the result of unauthorized access.”

Asked about the political contributions, Bankman-Fried said they came from “company profits” and were made to both Republicans and Democrats for what he called “pandemic prevention.” He was one of the largest donors to Democratic campaigns in the 2022 election cycle.

■He has about 0,000 in cash on hand.

Bankman-Fried participated online in a Dealbook Summit hosted by the NYT on November 30 and interviewed by the paper’s columnist, Andrew Ross Sorkin. He said that he decided to go public for the first time since the FTX collapse, despite strong prodding from his lawyers, and that “I owe it to myself to explain what happened.”

Toward the end of the interview, Bankman-Fried hesitated when asked if he had been completely truthful, but eventually replied, “I have never lied.” However, he stated, “Sometimes I acted as a marketer and emphasized the positive aspects of the company rather than the negative.”

Forbes estimated Bankman-Fried’s assets at their peak at about $26.5 billion. He said that after the collapse of FTX, his assets were “close to zero,” and that “all I have now is about $100,000 left in my bank account.”

Bankman-Fried denied rumors that the workplace culture at FTX was dominated by drug-fueled parties and said he rarely drank alcohol or used illegal drugs. He himself said his drinking was “about half a glass a year.”

According to several reports, FTX is under investigation by both the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC).

FTX claims to owe $3.1 billion to 50 large creditors, but there are believed to be more than 1 million creditors in all.