The New York Times’s DealBook newsletter held its annual conference in New York on Wednesday, capped by a dramatic interview with Sam Bankman-Fried, the fallen crypto mogul.
It was Mr. Bankman-Fried’s first public appearance since the collapse of his cryptocurrency empire, which included FTX, the crypto exchange, and its trading arm, Alamada Research. The Times’s Andrew Ross Sorkin interviewed him for over an hour in a discussion that generated headlines and tweets around the world.
S.B.F., as he’s known, addressed many questions (and dodged a bunch, too) about how his business went bust last month, a multibillion-dollar meltdown that could take years to sort through in bankruptcy courts. The ordeal has also wiped out much of his personal wealth. As he spoke, it became increasingly clear that the lost fortunes won’t be recovered. Ultimately, he said, he “screwed up.”
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He said he “didn’t knowingly commingle” FTX customer funds with those of Alameda Research, the exchange’s trading arm, which served as a market maker on FTX, facilitating customer transactions and making its own very risky leveraged bets.
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He denied he had knowingly committed fraud. “I did not ever try to commit fraud on anyone,” he said.
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He said that he did not realize what a dangerous position the firms were in until it was too late.
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He admitted that big mistakes were made, including poor if not nonexistent risk management and no oversight to protect customer accounts.
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He said that he was telling the truth — or that he was not aware of bending it. “I don’t know of times when I lied,” he told The Times, and said he “was as truthful as I’m knowledgeable to be.”
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He said the political donations he had made, which filings showed amounted to $40 million, were not meant as an attempt to buy access to lawmakers.
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He appears to have ignored legal advice to stay quiet as several countries continue to investigate the implosion of his firms.
Read the full transcript here.
The Aftermath of FTX’s Downfall
The sudden collapse of the crypto exchange has 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 spectacular rise and fall of the man behind FTX.
- Clinging to Power: Emails and text messages show how FTX lawyers and executives struggled to persuade Mr. Bankman-Fried to give up control of his collapsing company.
- Collateral Damage: BlockFi, a cryptocurrency lender that targeted ordinary investors eager for a piece of the crypto mania, filed for bankruptcy on Nov. 28, felled by its financial ties to FTX.
- A Symbiotic Relationship: Mr. Bankman-Fried’s built FTX partly to help the trading business of Alameda Research, his first company. The ties between the two entities are now coming under scrutiny.
A Phone Call to the Parents: ‘There Might Be a Liquidity Issue’
Mr. Bankman-Fried said on Wednesday that his parents “bore no responsibility” for the downfall of FTX and the trading arm, Alameda Research, which he founded.
“Anyone close to me, including my parents and employees and co-workers who fought with the company to push forward, they were hurt by this,” he said. “They bore no responsibility for that. I feel really bad about that. I feel really grateful for the support my parents are still giving me throughout all of this.”
Mr. Bankman-Fried’s parents are Stanford Law School professors, who he has said were influential in shaping his ethical framework. Their vocations also helped lend Mr. Bankman-Fried, 30, a further 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 firm began to collapse last month. FTX was forced to file for bankruptcy after an avalanche of customer withdrawals created an $8 billion hole on the firm’s balance sheet. Mr. Bankman-Fried likened the customer exodus to a run on the bank.
“I think I called them up and said, ‘Hey guys, I think there might be a problem, like, it looks like Alameda’s position might be imploding here — there might be a liquidity issue,’” he said.
When asked about the $300 million worth of real estate that FTX and Mr. Bankman-Fried’s parents reportedly bought in the Bahamas, he said he did not “know the details but that it was not intended to be their long-term property.”
“They may have stayed there while working with the company sometime over the last year,” he said.
As for other immediate personal fallout from the implosion of FTX, Mr. Bankman-Fried said he thought he had one working credit card and $100,000 left in the bank.
“I don’t have any hidden funds here,” he said.
Mr. Bankman-Fried also said FTX had a tame work culture, brushing aside a question from Mr. Sorkin about FTX staff members’ alleged drug use. “There were no wild parties,” he said. “At our parties, we play board games. Twenty percent of people would have a quarter of a beer each, and the rest of us would not drink anything.”
Mr. Bankman-Fried said he had been prescribed “various things” to help with concentration.
“I think they help me focus a little bit,” he said. “I had been a lot more focused over the last year.”
And to the question of whether he lied to customers, investors and regulators: “I was as truthful as I’m knowledgeable to be,” he said.
