Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (2024)

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Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (1)

The New York Times

‘I was as truthful as I’m knowledgeable to be,’ the FTX founder said.

Sam Bankman-Fried, the cryptocurrency billionaire whose empire collapsed spectacularly this month and spawned at least two federal investigations, sat for a wide-ranging interview on Wednesday at The New York Times’s DealBook Summit, saying he “screwed up.”

Mr. Bankman-Fried seemed to frame the failure of his $32 billion cryptocurrency exchange, FTX, largely as a risk management problem that got out of hand. Here’s a look at his comments:

  • Asked whether he was concerned about criminal liability, Mr. Bankman-Fried had a hard time finding his footing in what he wanted to say — fidgeting, stopping and starting. “There’s a time and a place for me to think about myself and my own future,” he said. “I don’t think this is it.”

  • Although he didn’t explain how it could happen, Mr. Bankman-Fried said he believed customers could still be made “fully whole.” He himself said he had “close to nothing” and had not hidden any funds — and was left with one working credit card.

  • Asked what happened to the $515 million that was suspiciously transferred from FTX after its bankruptcy filing, Mr. Bankman-Fried gave a list of possibilities, including “improper access of assets.”

  • Mr. Bankman-Fried said his lawyers did not support his decision to speak, but he decided to sit for the interview. “I have a duty to talk and to explain what happened,” he said. He added that he “didn’t know of times” that he had lied, but said he tried to make FTX seem exciting. “I was as truthful as I’m knowledgeable to be,” he said.

Nov. 30, 2022, 8:13 p.m. ET

Nov. 30, 2022, 8:13 p.m. ET

Stephen Gandel

Sam Bankman-Fried’s defense: ‘I did not try to commit fraud.’

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Sam Bankman-Fried blamed the spectacular collapse of his cryptocurrency exchange FTX this month on poor oversight and client losses but denied he had knowingly committed fraud.

“I did not try to commit fraud on anyone,” he said at the DealBook Summit on Wednesday, in his first live interview since the multibillion-dollar fund filed for bankruptcy and regulators from a number of countries have started looking into the company’s collapse.

Mr. Bankman-Fried also said he never intended to commingle customer assets with Alameda, the trading firm that he also controlled and is a sister company of FTX.

Over the past few weeks, FTX has been accused of violating its own terms of service for customer accounts that forbid the exchange from using client assets to fund loans or trading at Alameda. But on Wednesday, Mr. Bankman-Fried denied the allegation. He admitted that client assets ended up at Alameda, but he said this was the result of loans that the trading firm made to facilitate trades for FTX’s clients.

“Margin calls, customers borrowing from each other, and from Alameda was one of those,” Mr. Bankman-Fried said, referring to the problems that brought down his firm.

As those client bets went bad, Mr. Bankman-Fried said FTX raced to close the margin accounts but the losses grew too quickly. Covering them, along with a rush of withdrawals in early November, drained FTX’s accounts and caused the exchange to collapse.

If he made a mistake, Mr. Bankman-Fried said, it was not keeping track of the size of the bad bets his clients were taking. “There was no person chiefly in charge of positional risk of customers of FTX, and that feels pretty embarrassing in retrospect,” he said.

U.S. securities laws prevent brokerage firms from funding clients’ margin lending, or covering the losses of those trades, with other customer assets. But FTX operated in the Bahamas where local regulations are less stringent.

When asked whether his account of what went wrong at FTX was truthful, Mr. Bankman-Fried said: “I was as truthful as I am knowledgeable to be. There are some things I wish I knew more about.”

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Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (3)

Nov. 30, 2022, 7:33 p.m. ET

Nov. 30, 2022, 7:33 p.m. ET

Ephrat Livni

It was clear from the interview that SBF knows he could face civil and criminal liability over FTX, but he just cannot stop talking about it. What he's said can be used by investigators and prosecutors in jurisdictions around the world, but he can’t seem to relinquish control of the story or imagine a time when his explanations may be unwelcome.

Nov. 30, 2022, 7:33 p.m. ET

Nov. 30, 2022, 7:33 p.m. ET

Ephrat Livni

Ignoring legal advice, Sam Bankman-Fried says he felt compelled to speak about what went wrong at FTX.

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Why would Sam Bankman-Fried want to speak to the world while under investigation?

The fallen founder of the cryptocurrency empire FTX took the question head on at the DealBook Summit on Wednesday, saying it was his “duty.”

“The classic advice is ‘don’t say anything, recede into a hole,’” he said. But he would have none of that. “That’s not who I am, and that’s not who I want to be,” he told Andrew Ross Sorkin. “I have a duty to talk and explain what happened.”

Mr. Bankman-Fried is being investigated by the authorities in multiple jurisdictions, including the Bahamas, Turkey and the United States.

He faces civil and criminal liability for the collapse in which investors and customers may be out billions in funds they’ll never recover.

The son of two Stanford University law professors, Mr. Bankman-Fried said that his parents did not approve of the tweets, letters and other comments he’d made since FTX filed for bankruptcy this month, but Mr. Bankman-Fried said he did not see the good it would do to sit in a room “pretending the outside world doesn’t exist.”

But everything Mr. Bankman-Fried has said can and very likely will be used against him in court. Some of the authorities who are investigating the FTX collapse have said that prison — and even a life term — could be a possibility for him.

Mr. Bankman-Fried is in the Bahamas now, but he said there was no legal risk for him in returning to the United States. He said that he could envision eventually explaining to lawmakers what went wrong at FTX.

Nov. 30, 2022, 7:22 p.m. ET

Nov. 30, 2022, 7:22 p.m. ET

Lauren Hirsch

Sam Bankman-Fried’s phone call to his parents: ‘There might be a liquidity issue.’

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The FTX founder Sam Bankman-Fried said on Wednesday that his parents “bore no responsibility” for the downfall of his crypto exchange 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,” Mr. Bankman-Fried 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.”

Both of Mr. Bankman-Fried’s parents are Stanford Law School professors, who Mr. Bankman-Fried 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. Bankman-Fried was asked by Andrew Ross Sorkin at the DealBook Summit what he told his parents when his firm began to collapse this 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 of his parents.

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 painted FTX as having a tame work culture, brushing aside a question from Mr. Sorkin about FTX staffers’ alleged drug use. “There were no wild parties. 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.

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Now that the dust has settled from the interview, it seems clear SBF does not want any blame for FTX’s collapse to fall on his parents. Both are Stanford Law School professors and SBF has said they were influential in shaping his ethical framework. In the interview, he stressed that they “bore no responsibility” for what happened.

Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (7)

Nov. 30, 2022, 6:35 p.m. ET

Nov. 30, 2022, 6:35 p.m. ET

Stephen Gandel

Another plank to the SBF defense: that it is possible FTX’s clients could end up getting their money back. Details were sparse on how, but he did cite the example of Bitfinex’s hack a few years ago. Bitfinex, though, ended up paying a $18.5 million fine in relation with how it responded to that hack. In that settlement, NY AG Letitia James said Bitfinex had acted “recklessly and unlawfully” with client funds.

Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (8)

Nov. 30, 2022, 6:32 p.m. ET

Nov. 30, 2022, 6:32 p.m. ET

Lauren Hirsch

A recap: Andrew asks whether the fact that FTX did not have a board is a problem. He says the problem is there were too many boards — of FTX Japan, Singapore, Europe, etc. As result, he says, there was no singular entity overseeing SBF’s global risk management.

Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (9)

Nov. 30, 2022, 6:32 p.m. ET

Nov. 30, 2022, 6:32 p.m. ET

Stephen Gandel

SBF repeatedly mentioned clients' margin accounts, and said the problem at FTX was a lack of risk controls and allowing those margin accounts to grow too large. More evidence that SBF plans to shift the blame of FTX’s failure, not to Alameda’s bad bets or potentially unlawful shifting of funds, but to clients. The blame-the-customers defense is unlikely to quell the calls from crypto Twitter for his prosecution.

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Nov. 30, 2022, 6:24 p.m. ET

Nov. 30, 2022, 6:24 p.m. ET

Eric Lipton and Ephrat Livni

Before FTX fell apart, Sam Bankman-Fried was a crypto nomad.

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One night last year, Sam Bankman-Fried watched from Hong Kong as a global cryptocurrency crash played out on the six monitors arrayed before him.

His trading platform, FTX, specialized in the kind of futures trades that were accelerating the crash, with falling prices crushing the highly leveraged bets of bullish traders on FTX and other exchanges and setting off wave after wave of account liquidations.

It’s precisely the type of situation that United States regulators tried to avoid by prohibiting cryptocurrency exchanges like FTX from selling high-risk futures to nonprofessional investors in the United States.

And it is why Mr. Bankman-Fried moved to Hong Kong.

Mr. Bankman-Fried was a crypto nomad: one of a group of industry leaders who once lived in the United States or Canada but set up companies with bases of operation where they are to some degree beyond the reach of American regulators.

Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (12)

Nov. 30, 2022, 6:11 p.m. ET

Nov. 30, 2022, 6:11 p.m. ET

Lauren Hirsch

SBF said, “I obviously wish that I spent more time dwelling on the downsides and less time thinking about the upsides.”

Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (13)

Nov. 30, 2022, 6:11 p.m. ET

Nov. 30, 2022, 6:11 p.m. ET

Ryan Mac

And just like that, the interview is over. SBF signs off.

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Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (14)

Nov. 30, 2022, 6:09 p.m. ET

Nov. 30, 2022, 6:09 p.m. ET

Ephrat Livni

“I was as truthful as I’m knowledgeable to be,” SBF said. “I don’t know of times when I lied.”

Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (15)

Nov. 30, 2022, 6:09 p.m. ET

Nov. 30, 2022, 6:09 p.m. ET

Lauren Hirsch

SBF says he think he has one working credit card left.

Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (16)

Nov. 30, 2022, 6:08 p.m. ET

Nov. 30, 2022, 6:08 p.m. ET

Ephrat Livni

SBF says there were too many boards of directors and names the entities that did have boards, sometimes citing entities that were just bought by FTX within the last six months to a year …. They were not companies he created.

Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (17)

Nov. 30, 2022, 6:06 p.m. ET

Nov. 30, 2022, 6:06 p.m. ET

Ryan Mac

And he’s back.

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Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (18)

Nov. 30, 2022, 6:06 p.m. ET

Nov. 30, 2022, 6:06 p.m. ET

Ephrat Livni

SBF still seems reluctant to admit defeat and to believe that filing for bankruptcy was a mistake.

Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (19)

Nov. 30, 2022, 6:06 p.m. ET

Nov. 30, 2022, 6:06 p.m. ET

Ryan Mac

SBF just got cut off mid-answer to a question about boards.

Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (20)

Nov. 30, 2022, 6:03 p.m. ET

Nov. 30, 2022, 6:03 p.m. ET

Ryan Mac

SBF is still saying customers could be made “fully whole.” He doesn’t exactly explain how that would happen.

Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (21)

Nov. 30, 2022, 6:03 p.m. ET

Nov. 30, 2022, 6:03 p.m. ET

Ryan Mac

Despite saying he’s screwed up a few times, SBF has still found a few moments in this interview to smile or even chuckle at Andrew’s questions.

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Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (22)

Nov. 30, 2022, 6:02 p.m. ET

Nov. 30, 2022, 6:02 p.m. ET

Lauren Hirsch

On reports of drug use at FTX, SBF says “there were no wild parties. 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.” He says he has been prescribed various things to help him concentrate. “I think they help me focus a little bit,” he says.

Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (23)

Nov. 30, 2022, 5:59 p.m. ET

Nov. 30, 2022, 5:59 p.m. ET

Ryan Mac

Worth noting that FTX’s venture capitalists have been SBF’s biggest champions up until the collapse. Sequoia Capital famously published a long magazine-type feature in which the writer speculated SBF could be the world’s first trillionaire. The firm has since taken the article off its website.

Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (24)

Nov. 30, 2022, 5:58 p.m. ET

Nov. 30, 2022, 5:58 p.m. ET

Ephrat Livni

Andrew asks if venture capitalists and other investors ever asked him about the risk management issues. SBF responds, “I don’t think they bear any responsibility.” He says VCs think primarily about upsides.

Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (25)

Nov. 30, 2022, 5:58 p.m. ET

Nov. 30, 2022, 5:58 p.m. ET

Lauren Hirsch

SBF says he made mistakes — largely of risk management. He again seems to be making the case the issues that brought down his empire were unintentional mishaps, not intentional wrongdoing.

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Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (26)

Nov. 30, 2022, 5:54 p.m. ET

Nov. 30, 2022, 5:54 p.m. ET

Ephrat Livni

SBF says we “completely failed” on risk management, and conflict of interest risk. “There was no person in charge of positional risk on FTX.”

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Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (27)

Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (28)

Nov. 30, 2022, 5:53 p.m. ET

Nov. 30, 2022, 5:53 p.m. ET

Ryan Mac

SBF: “Look, I screwed up.”

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Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (29)

Nov. 30, 2022, 5:53 p.m. ET

Nov. 30, 2022, 5:53 p.m. ET

Ephrat Livni

Andrew asks SBF about the adderal use and group sleepovers. SBF responds, “We messed up big.”

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Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (30)

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Nov. 30, 2022, 5:44 p.m. ET

Nov. 30, 2022, 5:44 p.m. ET

Adam Pasick

Sam Bankman-Fried blames ‘massive failure of oversight’ for collapse of FTX.

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Sam Bankman-Fried, the founder of the now-bankrupt cryptocurrency exchange FTX, told the DealBook summit on Wednesday that the company’s downfall was caused by “a massive failure of oversight on my part.”

“Whatever happened, why it happened, I had a duty to our stakeholders, our customers, our investors, the regulators of the world, to do right by them,” he told Andrew Ross Sorkin via video from Bahamas. “Clearly, I didn’t do a good job of that. I didn’t ever try to commit fraud on anyone.”

“I’m deeply sorry about what happened,” Mr. Bankman-Fried added, while fidgeting and taking the occasional drink from a can of La Croix sparkling water.

He said that spiraling losses at Alameda Research, FTX’s sister company that he also controlled, left the trading firm with a large margin position at FTX — essentially meaning that the crypto exchange was loaning Alameda large sums of money.

He took pains not to mention Caroline Ellison, the former chief executive of Alameda Research, by name.

“I wasn’t running Alameda, I don’t know exactly what was going on,” he said. “I was nervous because of the conflict of interest of being too involved.”

“I didn’t knowingly commingle funds,” he added.

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Sam Bankman-Fried: ‘Look, I Screwed Up’: Sam Bankman-Fried Is Challenged on the Collapse of FTX (Published 2022) (2024)
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