Sam Bankman-Fried says he 'never tried to commit fraud'

Sam Bankman-Fried says he ‘never tried to commit fraud’

NEW YORK, Nov 30 (Reuters) – Sam Bankman-Fried, founder and former CEO of now bankrupt crypto exchange FTX, tried to distance himself from suggestions of fraud in his first public appearance since the collapse of his business. losses totaling billions of dollars.

Speaking via video link at The New York Times Dealbook Summit with Andrew Ross Sorkin on Wednesday, Bankman-Fried said he did not knowingly mix client funds on FTX with funds from his proprietary trading firm, AlamedaResearch.

“I never tried to commit fraud,” Bankman-Fried said in the hour-long interview, adding that he personally doesn’t believe he has any criminal liability.

He also denied knowing the extent of Alameda’s position on FTX, saying it took him by surprise.

The liquidity crunch at FTX came after Bankman-Fried secretly transferred $10 billion in funds from FTX clients to Alameda Research, Reuters reported, citing two people familiar with the matter. At least $1 billion in customer funds were missing, the people said.

Bankman-Fried told Reuters in November that the company did not “transfer secretly”, but rather misinterpreted its “confusing internal labeling”.

FTX filed for bankruptcy and Bankman-Fried resigned as chief executive on November 11, after traders withdrew $6 billion from the platform in three days and rival exchange Binance scrapped a deal safety.

“That week, so much happened,” he said.

Bankman-Fried said he was speaking from the Bahamas and the interview was against the advice of his lawyers. He was seen in the video link talking from a room, wearing a black T-shirt and occasionally drinking from a mug.

FTX is facing a flurry of investigations. The US attorney’s office in Manhattan began investigating how FTX handled customer funds in mid-November, a source with knowledge of the investigation told Reuters. The Securities and Exchange Commission and the Commodity Futures Trading Commission have also opened investigations.

When asked if he could come to the United States, Bankman-Fried replied that to his knowledge he could and that he would not be surprised if he traveled to Washington for the next hearings of the Congress on the collapse of the company.

The FTX implosion marked a stunning fall from grace for the 30-year-old entrepreneur who boomed the cryptocurrency to a net worth that Forbes pegged a year ago at $26.5 billion. After launching FTX in 2019, he became an influential political donor and pledged to donate most of his earnings to charity.

He said Wednesday that he had “almost nothing” left and only had a working credit card with “maybe $100,000 in that bank account.”

Since FTX filed for bankruptcy, Bankman-Fried has distanced himself from the image he projected in media interviews and on Capitol Hill, telling a Vox reporter that his advocacy for a crypto regulatory framework n was “all public relations” and that his discussions of ethics within the industry were at least partly a front.

Bankman-Fried said he was “confused” as to why the US entity of FTX, which was included in the bankruptcy filing, is not processing customer withdrawals. Refunds are currently suspended for US and international customers.

“To my knowledge, all US clients and all US regulated companies here, I think at least in terms of client assets, are doing well,” he said, adding that the derivatives contracts of the one of its US subsidiaries were “fully guaranteed”.


Bankman-Fried said Alameda had gained a substantial position in FTX, and as digital asset prices fell this year, Alameda was becoming increasingly leveraged to the point of no return earlier this month.

“In reality, (there was) no possibility for FTX to liquidate this position and generate all its due,” he said.

He added that he “didn’t try to mix funds” but said that when FTX didn’t have a bank account, some customers wired money to Alameda and got credited to FTX, which likely resulted in differences.

Bankman-Fried stepped down as CEO of Alameda in October 2021, four years after founding the company, and ceded the role to Caroline Ellison and Sam Trabucco, who acted as co-CEOs until what Trabucco leaves the company in August.

For his part, Bankman-Fried said he regretted focusing on the big picture at FTX at the expense of risk management, which he said he paid less attention to during “the last year or the last two years”.

His companies “have completely failed” when it comes to risk management, he said.

“There was no one who was primarily in charge of client positional risk on FTX, and that seems quite embarrassing in retrospect.”

Reporting by Carolina Mandl and Lananh Nguyen in New York and Manya Saini in Bengaluru; written by Hannah Lang in Washington; edited by Megan Davies, Deepa Babington and Sam Holmes

Our standards: The Thomson Reuters Trust Principles.

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