Sam Bankman-Fried says he “never intended to commit fraud”

Sam Bankman-Fried says he "never intended to commit fraud"
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NEW YORK, Nov 30 (Reuters) – Sam Bankman-Fried, the founder and former CEO of now-bankrupt crypto exchange FTX, tried to distance himself from fraud suggestions in his first public appearance since his company’s collapse shocked investors. investors and left creditors facing billions of dollars in losses.

Speaking via video link at the New York Times Dealbook Summit with Andrew Ross Sorkin on Wednesday, Bankman-Fried said he did not knowingly commingle client funds at FTX with funds at his proprietary trading company, Alameda. research.

“I never tried to commit fraud,” Bankman-Fried said in the hour-long interview, adding that she personally doesn’t believe she bears any criminal liability.

He also denied knowing the full scale of Alameda’s position at FTX, claiming it caught him off guard.

The liquidity crisis at FTX came after Bankman-Fried secretly moved $10 billion of funds from FTX clients to Alameda Research, Reuters reported, citing two people familiar with the matter. At least $1 billion in client funds had vanished, the people said.

Bankman-Fried told Reuters in November, the company did not “secretly transfer” but rather misread its “confusing internal labeling.”

FTX filed for bankruptcy and Bankman-Fried resigned as CEO on November 1. On February 11, after traders withdrew $6 billion from the platform in three days and rival exchange Binance abandoned a bailout deal.

“That week, a lot happened,” he said.

Bankman-Fried said she was speaking from the Bahamas and that the interview was against the advice of her lawyers. He was seen in the video link speaking from a room, wearing a black T-shirt and occasionally drinking from a mug.

FTX is facing a series of investigations. The US Attorney’s Office in Manhattan began investigating in mid-November how FTX handled client funds, a source with knowledge of the investigation told Reuters. The Securities and Exchange Commission and the Commodity Futures Trading Commission have also opened investigations.

Asked if he could come to the United States, Bankman-Fried replied that, to the best of his knowledge, he could and would not be surprised to travel to Washington for upcoming congressional hearings on the company’s collapse.

The FTX implosion marked an impressive fall from grace for the 30-year-old entrepreneur who rode a cryptocurrency boom to a net worth Forbes estimated a year ago at $26.5 billion. After launching FTX in 2019, he became an influential political donor, pledging to donate most of his profits to charity.

He said Wednesday that he now has “next to nothing” left and only one working credit card left with “maybe $100,000 in that bank account.”

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 that his advocacy of a crypto regulatory framework was “just PR.” and their discussions of ethics within the industry were at least partly a front.

Bankman-Fried said it was “confused” as to why FTX’s US entity, which was included in the bankruptcy filing, is not processing client withdrawals. Redemptions are currently on hold for US and international customers.

“As far as I know, all the US clients and all the US businesses regulated here, I think at least in terms of client assets, they’re fine,” he said, adding that derivative contracts at one of his US subsidiaries were ” fully guaranteed.”


Bankman-Fried said that Alameda had built a substantial position in FTX and that as digital asset prices plunged this year, Alameda became increasingly leveraged to the point of no return earlier this month.

“Realistically speaking, (there was) no ability for FTX to liquidate that position and generate all that was owed,” he said.

He added that he was “not trying to mix funds,” but said that when FTX did not have a bank account, some customers transferred money to Alameda and credited FTX, which likely led to discrepancies.

Bankman-Fried stepped down as Alameda’s CEO in October 2021, four years after founding the company, handing over the position to Caroline Ellison and Sam Trabucco, who served as co-CEOs until Trabucco left the company in August.

For his part, Bankman-Fried said he regretted focusing on the big picture at FTX at the expense of risk management, which he said he paid less attention to over “the last one or two years.”

His companies “completely failed” at risk management, he said.

“There was no one person who was primarily in charge of client positional risk at FTX, and that feels pretty embarrassing in hindsight.”

Reporting by Carolina Mandl and Lananh Nguyen in New York and Manya Saini in Bangalore; written by Hannah Lang in Washington; edited by Megan Davies, Deepa Babington and Sam Holmes

Our standards: The Thomson Reuters Trust Principles.

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