Sam Bankman-Fried strikes apologetic pose as he describes being shocked by FTX's fall
Updated December 1, 2022 at 9:11 AM ET
Currently the most notorious figure in the crypto industry, Sam Bankman-Fried on Wednesday claimed he "didn't try to commit fraud on anyone."
"I'm deeply sorry about what happened," said Bankman-Fried, the founder and now-former CEO of the cryptocurrency exchange FTX, during a live interview at the New York Times Dealbook Summit.
The day-long summit included high-profile guests, such as Treasury Secretary Janet Yellen, but many were wondering if Bankman-Fried, who committed to participate in the event before FTX imploded, would show up.
Sure enough, he did, frequently portraying himself as someone in the dark about the activities and condition of FTX and his hedge fund Alameda Research.
Bankman-Fried spoke for more than an hour, wearing his signature T-shirt and appearing apologetic when the interviewer, journalist Andrew Ross Sorkin, read messages from FTX customers who said they had lost their life savings.
"I've had a bad month," said the 30-year-old onetime darling of both Wall Street and Washington, eliciting laughter from the audience. "This is not what matters here. Like, what matters here is the millions of customers."
Sorkin asked Bankman-Fried if his lawyers were okay with him giving the interview, which was broadcast on CNBC as well as the New York Times web site. Bankman-Fried said no.
"The classic advice is: "don't say anything, recede into a hole," he said. "I have a duty to talk. I have a duty to explain what happened. And I have a duty to do everything I can to try and do what's right."
The spectacular crash of FTX and its dozens of affiliates littered around the globe was triggered by a tweet on Nov. 6 from another titan in the crypto industry, Binance CEO Changpeng Zhao, that raised questions about the company's solvency. In a matter of days, FTX had fallen, and with it, Bankman-Fried's fortune and reputation.
"I saw it as a thriving, growing business," he said in the interview. "I was shocked by what happened this month. And you know, reconstructing it, there are things I wish I had done differently."
Bankman-Fried appeared from the Bahamas, where FTX is headquartered, and where he has been under investigation by Bahamian regulators. He was frequently asked about the relationship between FTX and Alameda Research, which held many of FTX's assets.
Bankman-Fried said that after the tweet on Nov. 6 raising concerns about FTX's stability and its ties to Alameda, he saw a "run on the bank start," which led to about $4 billion a day in withdrawals.
"I start to become nervous that FTX is not going to be able to fill customer withdrawals... and I'm starting to think about emergency scenarios," he said. "On Nov. 5 I was feeling quite good about that. On Nov. 7 I was feeling quite uneasy about that."
In the early hours of Nov. 11, Bankman-Fried resigned and the company filed for bankruptcy.
Throughout the interview, he denied knowing key financial information and portrayed himself as out-of-touch, saying he should have exercised more oversight and didn't spend enough time exploring risks, as well as blaming others in the company.
While tucked away in the Bahamas, Bankman-Fried has taken the unusual step of going on a charm campaign and also cast himself as unaware of his company's messy finances and the potential harm to his customers in a Thursday interview on "Good Morning America."
"I did not know that there's any improper use of customer funds," Bankman-Fried said in the interview with George Stephanopoulos, which was taped in the Bahamas.
Court filings describe how Bankman-Fried and colleagues used apps that automatically delete messages for official company communications and how they approved expense reports with emojis.
The lawyer representing FTX in the bankruptcy proceedings has said that the company had a "lack of corporate controls" at a level he'd never seen before, and that FTX's new management is struggling to piece together a financial picture of the exchange which had "unreliable books and records."
"I wasn't spending any of my time or effort trying to manage risk on FTX," Bankman-Fried said in the Stephanopolous interview. "I don't know what to say. Like, what happened happened, and if I had been spending an hour a day thinking about risk management on FTX, I don't think that would've happened."
Treasury Secretary says crypto is having a "Lehman moment"
With the bankruptcy of another crypto company, BlockFi, earlier this week, many are not just asking about what happened to FTX. They want to know if the end of cryptocurrencies is close and if there's a risk to the greater financial system.
The shaky industry is attracting the attention of Washington, with Yellen telling the summit that "it's a 'Lehman moment' within crypto," referring to the collapse of Lehman Brothers that contributed to the global financial crisis 15 years ago.
"And crypto is big enough that you've had substantial harm of investors, and particularly people who aren't very well informed about the risks that they're undertaking, and that's a very bad thing," she said.
FTX pitched itself as a way for everyday people to enter the often opaque and confusing world of crypto, buying Super Bowl ads and creating a platform where it was easy to buy virtual currencies. Thousands of smaller investors, wanting to profit from the massive escalations in coins and tokens, rushed to sign up.
In her comments, Yellen once again called on Congress to strengthen the oversight of virtual currencies, saying the industry "really needs to have adequate regulation, and it doesn't."
Taking his case to the public
From the beginning, it was pretty clear Bankman-Fried wasn't going to go quietly.
As his crypto empire started to collapse, he tried to explain himself on Twitter. "I sincerely apologize," he posted. "I f---ed up, and should have done better."
After he relinquished control of FTX, and the company filed for bankruptcy, Bankman-Fried's tone changed. But he kept tweeting, and started to make his case to journalists again.
In an astonishing piece, drawn from direct messages he exchanged with a Vox columnist, Bankman-Fried claimed he was still trying to raise money to make FTX customers whole, and he criticized the regulators who now have him in their crosshairs.
"F--- regulators," he wrote. "They make everything worse."
That comment, and Bankman-Fried's eagerness to make his case in the public square, prompted an official response from John J. Ray III, who succeeded him at FTX.
"Mr. Bankman-Fried, currently in the Bahamas, continues to make erratic and misleading public statements," he wrote in a bankruptcy filing.
Ray noted Bankman-Fried is no longer an employee of FTX, and he doesn't speak for the company.
Substantial amount of money has been stolen or is just "missing"
Under Ray's stewardship, FTX has begun bankruptcy proceedings in Delaware.
The company estimates it has more than 1 million creditors, and according to one of its lawyers, "a substantial amount of assets have either been stolen, or are missing."
"We have witnessed one of the most abrupt and difficult collapses in the history of corporate America," said James Bromley, an attorney representing the company.
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