Sam Bankman-Fried says he ‘did not ever attempt to commit fraud’

Sam Bankman-Fried, the founder and former CEO of now-bankrupt crypto alternate FTX, tried to distance himself from options of fraud in his first public look since his firm’s collapse surprised buyers and left collectors dealing with losses totaling billions of {dollars}.

Talking through video hyperlink on the New York Occasions’ Dealbook Summit with Andrew Ross Sorkin on Wednesday, Bankman-Fried mentioned he didn’t knowingly commingle buyer funds on FTX with funds at his proprietary buying and selling agency, Alameda Analysis.

“I did not ever attempt to commit fraud,” Bankman-Fried mentioned within the hour-long interview, including that he would not personally suppose he has any prison legal responsibility.

He additionally denied realizing the complete scale of Alameda’s place on FTX, claiming that it caught him without warning.

The liquidity crunch at FTX got here after Bankman-Fried secretly moved $10 billion of FTX buyer funds to Alameda Analysis, Reuters reported, citing two individuals aware of the matter. At the very least $1 billion in buyer funds had vanished, the individuals mentioned.

Bankman-Fried advised Reuters in November the corporate didn’t “secretly switch” however reasonably misinterpret its “complicated inside labeling.”

FTX filed for chapter and Bankman-Fried stepped down as chief government on Nov. 11, after merchants pulled $6 billion from the platform in three days and rival alternate Binance deserted a rescue deal.

“That week, a lot occurred,” he mentioned.

Bankman-Fried mentioned he was talking from the Bahamas and that the interview was towards the recommendation of his legal professionals. He was seen within the video hyperlink speaking from a room, wearing a black T-shirt and infrequently consuming from a mug.

FTX faces a flurry of investigations. The U.S. Legal professional’s Workplace in Manhattan in mid-November started investigating how FTX dealt with buyer funds, a supply with data of the probe advised Reuters. The Securities and Change Fee and Commodity Futures Buying and selling Fee have additionally opened probes.

When requested if he might come to america, Bankman-Fried replied that to his data he might, and that he wouldn’t be shocked if he traveled to Washington for upcoming congressional hearings on the corporate’s collapse.

The implosion of FTX marked a shocking fall from grace for the 30-year-old entrepreneur who rode a cryptocurrency increase to a internet value that Forbes pegged a 12 months in the past at $26.5 billion. After launching FTX in 2019, he grew to become an influential political donor and pledged to donate most of his earnings to charities.

He mentioned Wednesday that he now has “near nothing” left and is down to 1 working bank card with “possibly $100,000 in that checking account.”

Since FTX filed for chapter, Bankman-Fried has distanced himself from the picture he projected in media interviews and on Capitol Hill, telling a Vox reporter his advocacy for a crypto regulatory framework was “simply PR” and his discussions on ethics inside the trade had been not less than partly a entrance.

Bankman-Fried mentioned he was “confused” as to why FTX’s U.S. entity, which was included within the chapter submitting, will not be processing buyer withdrawals. Redemptions are presently paused for each U.S. and worldwide clients.

“To my data all American clients and all American regulated companies listed below are, I believe not less than when it comes to shopper property, are okay,” he mentioned, including that derivatives contracts at one among its U.S. subsidiaries had been “totally collateralized.”

WHAT HAPPENED

Bankman-Fried mentioned that Alameda had constructed up a considerable place on FTX and that as digital asset costs plummeted this 12 months, Alameda grew to become more and more extra levered to the purpose of no return earlier this month.

“Realistically talking, (there was) no skill for FTX to have the ability to liquidate that place and generate all the pieces that was owed,” he mentioned.

He added that he “wasn’t making an attempt to commingle funds,” however mentioned that when FTX did not have a checking account, some clients wired cash to Alameda and had been credited on FTX, which possible led to discrepancies.

Bankman-Fried stepped down as CEO of Alameda in October 2021, 4 years after founding the corporate, and ceded the position to Caroline Ellison and Sam Trabucco, who acted as co-CEOs till Trabucco departed the agency in August.

For his half, Bankman-Fried mentioned he regretted specializing in the larger image at FTX on the expense of threat administration, which he mentioned he paid much less consideration to over “the final 12 months or two.”

His firms “utterly failed” on threat administration, he mentioned.

“There was no one that was mainly accountable for positional threat of consumers on FTX, and that feels fairly embarrassing on reflection.”