On Wednesday at the New York Times Dealbrook Summit, Sam Bankman-Fried (SBF), the former CEO of the defunct crypto exchange FTX, denied intentionally combining customer assets with those held by Alameda Research, his proprietary trading company.
Sam Bankman-Fried, in an interview with Andrew Ross Sorkin, admitted to making “a lot of mistakes” prior to the collapse of the crypto exchange, which threatens to cause significant financial losses for users of his FTX trading platform. He claimed he “never tried to commit fraud,” but he also acknowledged that he “never tried to lie.”
SBF said in the interview:
“I didn’t ever try to commit fraud on anyone, I was shocked by what happened this month.”
After investors withdrew $6 billion from the exchange in three days and rival exchange Binance backed out of a rescue plan, FTX declared bankruptcy on November 11, and Bankman-Fried resigned as CEO.
According to Bankman-Fried, who claimed to be speaking from the Bahamas, the interview was conducted against the advice of his lawyers.
Andrew Ross Sorkin read SBF a letter from a former FTX investor who claimed to have lost his $2 million life savings on the now-defunct crypto exchange.
The investor, like many others, suspected that FTX had loaned his money to Alameda Research, a trading company with close ties to FTX and Bankman-Fried.
According to Bankman-Fried, Alameda Research had more open leverage than he realized due to the use of FTT tokens as collateral. When the token lost 90% of its value earlier this month, the trading margin positions were cleared on FTX Trading, with “no realistic ability for FTX to liquidate that position.” Following the bankruptcy, FTX’s new CEO claimed that Alameda had been exempted from the exchange’s auto liquidation engine, which applied to other firms.
Andrew R. Sorkin asked SBF:
“I think the bigger question is where Alameda got the loan from, which is to say that there is a view that this is about commingling of funds,”
“Let’s get one thing straight. Was there commingling of funds? That’s what it appears like. It appears like there’s a genuine commingling of funds that are FTX customers’ that were not supposed to be commingled with your separate firm.”
SBF responded by saying:
“I didn’t knowingly commingle funds. And again, one piece of this you have the margin trading you have you know, customers borrowing from each other, Alameda is one of those. I was frankly surprised by how big Alameda’s position was, which points to another failure of oversight on my part.”
Andrew Sorkin refused to back down despite SBF’s claims.
Sorkin cited a Wall Street Journal report alleging that Caroline Elison, CEO of Alameda, used client funds from FTX to pay margin calls at her company and that Bankman-Fried and Gary Wang, FTX’s head of engineering, were aware of it.
SBF did not address this contradiction directly, but he did point out a discrepancy between FTX’s audited financials and the dashboard’s display of Alameda’s leverage position.
Prosecutors, authorities, and investors continue to investigate Bankman-Fried regarding the missing funds from FTX. When asked if he would travel to the US from the Bahamas, SBF responded that he wouldn’t be shocked if he were summoned to testify at one of the several hearings on the collapse of the exchange.
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