An apologetic Sam Bankman-Fried (SBF) opened up about his crypto empire’s rapid fall from grace with Andrew Sorkin at the New York Times’ Dealbooks Summit in his first live interview since the collapse of FTX.
“I didn’t ever try to commit fraud on anyone, I was shocked by what happened this month,” said SBF.
One of the biggest questions raised following the incredible implosion of what was once the world’s fourth largest crypto exchange, was the alleged misuse of funds between Alameda Research and FTX.
In case you missed it, FTX’s sister hedge fund, Alameda Research, began struggling to pay lenders back when crypto prices began falling in response to the collapse of Do Kwon’s Terra Money ecosystem in May this year.
As a result, it allegedly used roughly US$4 billion in customer funds from FTX to keep its head above water. This was one of the main pieces of evidence uncovered in a CoinDesk report which showed Alameda’s lack of “real” assets, triggered part of the crash when FTX customers began the crypto exchange equivalent of a run on the bank.
The overall summary of this interview is that SBF tried hard to frame much of the collapse as a series of genuine mistakes, worsened by his ignorance concerning different aspects of accounting and risk management. As the New York Times reports, there were parts of his new narrative that seemed to contradict evidence regarding the comingling of funds between FTX and Alameda.
When Sorkin pressed SBF for more details on the relationship between Alameda and FTX, the former-CEO said that he didn’t “knowingly co-mingle funds” between the two parts of his crypto empire. “Given the size of the position, I think it was not our intention, it was, in effect, tied together substantially more than I would have ever wanted to be,” he said.
With his gaze set on the floor for much of the interview, SBF said that his decision to speak publicly about the event went directly against the advice of his lawyers.
“The classic advice is don’t say anything, recede into a hole,” SBF said. “I don’t see what is accomplished by me sitting locked in a room pretending that the outside world doesn’t exist.”
SBF also added that he was “confused” as to why the United States arm of FTX wasn’t processing customer withdrawals right now.
SBF on stimulant use
The most laughter-inducing push from Sorkin came when he pressed SBF on his stimulant use, where Sorkin asked questions about the Adderall-fuelled “sleepover parties” that were rumoured to have gone down amongst senior officials at FTX.
“Can you just speak to the idea of this company that, at least from the public perspective, seemed like a regulated company or something that was very focused on compliance … but it seems like when you read the stories, it sounds like a bunch of kids who were on Adderall having a sleepover party,” Sorkin asked Bankman-Fried.
SBF gently dodged the question, by saying that there were no “wild parties” and that he’d only had his first sip of alcohol at 21.
While SBF’s claim of no wild partying may hold up, it doesn’t absolve him from the questions around potential stimulant abuse, with footage from numerous interviews showing him to be twitchy, noticeably shaking all while showing off some very dilated pupils.
Aside from SBF confessing to not have “knowingly commingled client funds” at FTX and Alameda Research, one of the most notable pieces of contradictory information was his choice to ease off on a number of statements he made to Vox’s Kelsey Piper, which at the time he believed were private.
“It was not meant to be a public interview, it was a longtime friend of mine who I stupidly forgot was also a reporter,” he said. “I thought I was speaking in a personal capacity.”
In his conversion with Piper, SBF admitted to manufacturing much of his altruistic image in a bid to deceive the public. He also admitted that declaring for bankruptcy was one of his biggest regrets and made some pretty off the cuff comments regarding his relationship with SU government officials.
“Fuck regulators” said SBF in the Vox interview, adding that they “only make everything worse.”
It’s possible to make FTX customers “whole again”
Without explaining any of the specifics, SBF explained that it was still possible to make FTX customers whole, or at the very least it was actually possible a month ago. SBF pointed to the existence of several assets that were merely illiquid, and said that FTX US and FTX Japan were probably still completely solvent. He added that he was “confused” as to why the United States arm of FTX hadn’t yet begun processing customer withdrawals.
When asked about his own personal financial situation, the disgraced former-CEO, who once was worth an estimated US$16 billion, told Sorkin that he was down to “one working credit card” and has roughly US$100,000 left to his name.
SBF stepped down from his role as the CEO of FTX earlier this month, being succeeded by seasoned bankruptcy expert John J. Ray III. In the bankruptcy filing for FTX , Ray — the lawyer famous for closing down the Enron mess — had never in his career “seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”