FTX founder Sam Bankman-Fried says he ‘screwed up’ but didn’t commit fraud
“Look, I screwed up,” fallen crypto billionaire Sam Bankman-Fried told a conference in New York on Wednesday, but he maintained he “didn’t ever try to commit fraud” and was “shocked” by the collapse of his businesses.
Bankman-Fried, with glassy eyes and visibly shaking at times, appeared via video conference from a nondescript room in the Bahamas. He told the New York Times’s DealBook Summit he was “deeply sorry about what happened” but consistently argued he did not have a full picture of what was going on within the various branches of FTX, his now bankrupt cryptocurrency exchange, and its offshoots.
Bankman-Fried resigned as head of the FTX cryptocurrency exchange when it declared bankruptcy earlier this month. The true fallout of the collapse is still emerging. FTX owes $3.1bn (£2.57bn) to its largest creditors, assets have disappeared, law enforcement and regulators are circling and Bankman-Fried’s freehanded largesse to the American political elite is set to cause a firestorm in Washington.
One key question about the collapse is whether FTX’s customers’ funds were misappropriated and given to FTX’s hedge fund, Alameda Research. Questioned by New York Times columnist Andrew Ross Sorkin, the 30year-old appeared to be shifting blame to Alameda.
“I didn’t knowingly comingle funds,” he said. “I was frankly surprised by how big Alameda’s position was.”
Asked if he had behaved like a bank teller who took the cash from the till home in the evening, Bankman-Fried said: “Look, I wasn’t running Alameda and I didn’t know exactly what was going on and the size of their position.” Alameda’s chief executive, Caroline Ellison, had reportedly been in a relationship with Bankman-Fried.
“Look, I’ve had a bad month. This is not great,” he told the audience to laughter. “What matters here is all the customers and stakeholders that got hurt and to help them out. What happens to me is not the important part.”
In earlier interviews at the conference, some of finance’s biggest players weighed in on the scandal. Larry Fink, the chief executive of BlackRock, the world’s largest asset manager, said it appeared that FTX’s collapse was the result of not just mismanagement, but bad behavior. Fink hinted that his firm, which had $24m (£20m) invested in FTX, may have been given misleading information.
“Right now, we can make all the judgment calls that it looks like there was some misbehavior of major consequence,” he told the conference. “Could we have been misled? Until we have more facts, I will not speculate.”
Treasury secretary Janet Yellen said that the FTX collapse was a “Lehman moment” for the crypto industry and described cryptocurrencies as “very risky assets”.
Bankman-Fried’s appearance at the Times’ DealBook summit comes after he has given a series of discursive and sometimes nonsensical explanations for the circumstances of FTX’s collapse, including blaming “poor internal labeling” of accounts for the company’s $8bn (£6bn) shortfall in assets.
Last week, he was dropped by leading US attorney Paul Weiss after US lawyers for FTX claimed he was disrupting its bankruptcy reorganization efforts through “incessant and disruptive tweeting”.
On stage, he acknowledged that his lawyers “were very much not” suggesting that it was a good idea to be speaking at the conference.
Bankman-Fried, whose personal fortune was estimated at $26bn (£21bn) at its peak, said he had about $100,000 (£83,000) to his name. Asked if he had been truthful in the interview, he said: “I was as truthful as I’m knowledgeable to be.”
The US senate agriculture committee has scheduled a hearing for Thursday on “Lessons Learned from the FTX Collapse” with commodity futures trading commission chair Rostin Behnam scheduled to appear as a witness. That will be followed, on 16 December, by hearings by the House financial services committee. It has said it expects Bankman-Fried to show up.