Sam Bankman-Fried, the founder and former CEO of now-bankrupt crypto exchange FTX, attempted to distance himself from suggestion of fraud in his first public appearance since his company’s collapse stunned investors and left creditors facing losses totalling billions of dollars.
Speaking at the New York Times’ Dealbook Summit with Andrew Ross Sorkin at what he said was against the advice of his lawyers, Bankman-Fried said that he did not knowingly commingle customer funds on FTX with funds at his proprietary trading firm, Alameda Research.
The liquidity crunch at FTX came after Bankman-Fried secretly moved $10-billion of FTX customer funds to Alameda Research, Reuters reported, citing two people familiar with the matter. At least $1 billion in customer funds had vanished, the people said.
Bankman-Fried told Reuters the company did not “secretly transfer” but rather misread its “confusing internal labelling.
FTX filed for bankruptcy and Bankman-Fried stepped down as chief executive on Nov. 11, after traders pulled $6-billion from the platform in three days and rival exchange Binance abandoned a rescue deal.
“By late on Nov. 6 we were putting together all of the data…that obviously should have been part of the dashboards I was always looking at…and when we looked at that, there was a serious problem there,” Bankman-Fried said.
Bankman-Fried added that he “didn’t ever try to commit fraud” and that he doesn’t personally think he has any criminal liability.
“The real answer is that’s not what I’m focusing on. There’s going to be a time and place for me to sort of think about myself and my own future,” he said.
The implosion of FTX marked a stunning fall from grace for the 30-year-old entrepreneur who rode a cryptocurrency boom 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 charities.
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 his advocacy for a crypto regulatory framework was “just PR” and his discussions on ethics within the industry were at least partly a front.
Bankman-Fried said he was “confused” as to why FTX’s U.S. entity is not processing customer withdrawals. Redemptions are currently paused for both U.S. and international customers.
“To my knowledge all American customers and all American regulated businesses here are, I think at least in terms of client assets, are okay,” he said, adding that derivatives contracts at one of its U.S. subsidiaries were “fully collateralized.”