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FTX's boss admits mistakes.

 Sam Bankman-Fried said he "never tried to commit fraud" but admitted he made "a lot of mistakes" ahead of the collapse of his $32bn cryptocurrency empire, which threatens to inflict significant losses on users of his popular FTX trading platform.

The founder of the now-bankrupt crypto exchange FTX denied "knowingly" commingling customer funds with those held by Alameda Research, his proprietary trading group.

"Clearly, I made a lot of mistakes or things I would give anything to be able to do over again," Bankman-Fried said at The New York Times Dealbook summit.

Appearing virtually from the Bahamas, Bankman-Fried grinned nervously, repeatedly tapped his foot, and appeared to shake involuntarily as he faced questions on topics from prescription drug use by FTX staff and improper transfer of funds to whether he knowingly flouted risk and compliance rules that jeopardised customer accounts.

"I was failing to pay nearly enough attention to positions and positional risk on the exchange and to Alameda’s in particular and . . . I substantially underestimated what the scale and speed of the [crypto] market crash would look like," he said. "There is a substantial discrepancy between what the true, audited financials were . . . versus what the dashboards we had displayed for Alameda’s account, which substantially under-displayed the size of the positions."

The collapse of FTX was precipitated by panicked customer withdrawals and ricocheted across crypto markets. It was discovered that as much as $8bn of funds were missing. The failure is being examined by criminal prosecutors and regulators in the US and the Bahamas.

Bankman-Fried said lawyers had told him not to agree to interviews. "I think I have a duty to talk and to explain what happened," he said. "I don’t see what good is accomplished by sitting in a room pretending that the outside world doesn’t exist." Asked about whether he was worried about potential criminal liability, he said: "It’s not what I’m focusing on. I had a bad month."

Bankman-Fried was replaced as CEO of FTX by John Ray III, a restructuring expert who represented plaintiffs in the Bernard Madoff and Allen Stanford frauds and helped unwind Enron. Ray had never seen "such a complete failure of corporate controls".

Bankman-Fried defended his position as one of the most prolific givers to the US Democratic party in the latest election cycle. "My donations were mostly for pandemic prevention, and they were looking at primary elections where there were candidates who are outspoken in favour of doing things now to prevent the next pandemic."

Bankman-Fried will continue to face questions and allegations from prosecutors, regulators, investors and up to 1mn creditors over FTX’s missing funds.

Asked if he would leave the Bahamas to come to the US, he said he "would not be surprised" if he was called on to give evidence at one of the hearings on the collapse.

‘I was failing to pay nearly enough attention to positions and positional risk on the exchange’

www.ft.com


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Comments

  1. Anonymous2 December 2022 at 11:30

    "Bankman" seems to be a well-suited name for Sam. He didn't know much and maybe he was just the face of this FTX. Maybe others are behind the collapse and he will take the fall.

    ReplyDelete
  2. Lenny2 December 2022 at 11:55

    On another (somewhat related) note: what is up with the very suspicious crypto related deaths lately? Tiantian Kullander and Vyacheslav Taran (major crypto CEOs) both died recently, plus it's been a month since millionaire cryptocurrency developer Nikolai Mushegian drowned in Puerto Rico.

    ReplyDelete
    Replies
    1. J2 December 2022 at 12:08

      Could this all be a coincidence? Or could they have maybe hidden their deaths and ran away with some crypto/money?

      Delete
    2. Zack2 December 2022 at 12:18

      I think there needs to be some investigation done into their companies to see if something is missing. Until this is done we won't know for sure.

      Delete
    3. Donald2 December 2022 at 12:47

      @J Or maybe someone that was/is laundering money through these companies had these people killed? It probably sounds far-fetched but what if...

      Delete

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