The New York Times newsletter DealBook held its annual conference in New York on Wednesday, capped off with a dramatic interview with fallen crypto mogul Sam Bankman-Fried.
It was Mr. Bankman-Fried’s first public appearance since the collapse of his cryptocurrency empire, which included crypto exchange FTX and its trading arm, Alamada Research. The Times’ Andrew Ross Sorkin interviewed him for over an hour in a discussion that generated headlines and tweets around the world.
SBF, as he is known, has answered many questions (and dodged a whole lot too) about how his company went bankrupt last month, a multi-billion dollar meltdown that could take years to resolve. before the bankruptcy courts. The ordeal also wiped out much of his personal wealth. As he spoke, it became increasingly clear that lost fortunes would not be recovered. In the end, he said, he “screwed up.”
He said he “did not knowingly mix” FTX client funds with those of Alameda Research, the trading arm of the exchange, which served as a market maker on FTX, facilitating client trades and making its own high-risk leveraged bets.
He denied knowingly committing fraud. “I never tried to defraud anyone,” he said.
He said he did not realize the dangerous position the companies were in until it’s too late.
He admitted big mistakes were madeincluding poor to no risk management and no oversight to protect customer accounts.
He said he was telling the truth — or that he was unaware of bending it. “I don’t know of any times I’ve lied,” he told The Times, and said he “was as truthful as he could be.”
He said the political donations he madewhose filings showed to amount to $40 million, were not intended to attempt to buy lawmakers access.
He seems to have legal advice ignored to remain silent as several countries continue to investigate the implosion of its businesses.
Read the full transcript here.
The consequences of the fall of FTX
The sudden collapse of the crypto exchange left the industry stunned.
- A spectacular rise and fall: Who is Sam Bankman-Fried and how did he become the face of crypto? The Daily charted the dramatic rise and fall of the man behind FTX.
- Clinging to power: The emails and text messages show how lawyers and FTX executives struggled to persuade Mr. Bankman-Fried to relinquish control of his bankrupt business.
- Collateral damage: BlockFi, a cryptocurrency lender that targeted mainstream investors hungry for a piece of the crypto mania, filed for bankruptcy on Nov. 28, shot down by its financial ties to FTX.
- A symbiotic relationship: Mr. Bankman-Fried built FTX in part to help the business operations of Alameda Research, his first company. The links between the two entities are now under scrutiny.
A phone call to parents: “There could be a liquidity problem”
Mr Bankman-Fried said Wednesday that his parents “bear no responsibility” for the downfall of FTX and the trading arm, Alameda Research, which he founded.
“All of my loved ones, including my parents, my employees and my colleagues who fought with the company to move forward, they were hurt by this,” he said. “They bore no responsibility for it. I feel really bad about this. I am truly grateful for the support my parents still give me through it all.
Mr. Bankman-Fried’s parents are professors at Stanford Law School, who he says were influential in shaping his ethical framework. Their vocations also helped give Mr. Bankman-Fried, 30, another veneer of credibility with investors and others as he built his cryptocurrency empire.
Mr Sorkin asked Mr Bankman-Fried what he told his parents when his business started collapsing last month. FTX was forced to file for bankruptcy after a flurry of customer withdrawals created an $8 billion hole in the company’s balance sheet. Mr. Bankman-Fried likened the exodus of customers to a run on the bank.
“I think I called them and said, ‘Hey guys, I think there might be a problem, like, it looks like the Alameda position might implode here – there might be a problem with liquidity,'” he said.
Asked about the $300 million in real estate that FTX and Mr. Bankman-Fried’s parents allegedly purchased in the Bahamas, he said he “didn’t know the details, but it was not intended to be their long-term ownership.
“They may have stayed there while working with the company for the past year,” he said.
As for other immediate personal fallout from the FTX implosion, Mr. Bankman-Fried said he believed he had a working credit card and had $100,000 left in the bank.
“I don’t have any hidden funds here,” he said.
Mr. Bankman-Fried also said FTX has a tame work culture, brushing aside a question from Mr. Sorkin about alleged drug use by FTX staff members. “There were no wild parties,” he said. “During our evenings, we play board games. Twenty percent of people would drink a quarter beer each, and the rest of us would drink nothing.
Mr Bankman-Fried said he was prescribed ‘various things’ to help with concentration.
“I think they help me focus a bit,” he said. “I had been much more focused over the past year.”
And when asked if he lied to customers, investors and regulators: “I’ve been as truthful as I can be,” he said.
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