Sam Bankman-Fried denies fraud in FTX collapse – Rolling Stone

By | December 1, 2022

even as critics furious that he is not yet in prison and rumors that he will cancel the risky public appearance, Sam Bankman-Fried, co-founder of the failed cryptocurrency exchange FTX, gave a live video interview to wrap up the New York Times‘ DealBook Summit conference on Wednesday.

Speaking from the Bahamas, where FTX is headquartered, Bankman-Fried said Schedules financial columnist Andrew Ross Sorkin: “I never tried to commit fraud on anyone.”

The Securities and Exchange Commission, the Commodity Futures Trading Commission and the US Department of Justice are investigating how FTX, once the world’s third-largest cryptocurrency exchange and valued at $32 billion, fell apart in a matter of days in early November. Binance, a rival exchange that tried to save it through an acquisition, pulled out of the deal, saying FTX’s problems were “beyond our control or ability to help.”

Amidst the chaos, Bankman-Fried was forced to step down as chief executive and allowed the company to declare bankruptcy, but only after days of clinging desperately to power despite company leaders urging him to step down.

“I made a lot of mistakes, there are things I would give anything to do again,” Bankman-Fried told Sorkin in their hour-long conversation, during which he drank a LaCroix pamplemousse, tapped his foot and often kept his eyes thrown down. Another one of his conclusions: “I had a bad month”.

At one point Sorkin, pressing him for the irresponsibility of FTX management and accounts of the hedonistic luxury they lived in, quipped, “Sounds like a bunch of kids in Adderall having a sleepover.”

“We got it wrong a lot,” replied Bankman-Fried. He denied, however, that the FTX team in the Bahamas had an out-of-control drug culture. “At our parties, we played board games,” he said. “I didn’t see any illegal drug use.” He said he was prescribed medication that helps him with focus and concentration.

The smoldering ruins of FTX are now being overseen by CEO John J. Ray III, an expert on corporate turnarounds best known for dealing with the aftermath of the Enron accounting scandal in 2001. In FTX’s bankruptcy filing, he wrote: “Never in my career I have seen such a complete failure of corporate controls and such a complete absence of reliable financial information as has occurred here.” Investors have been wiped out, there is an unexplained $8 billion deficit on the balance sheet, and the exchange still owes $3.1 billion to its top 50 creditors.

Many hold Bankman-Fried personally responsible for the crisis, and there are still significant questions about whether FTX and Alameda Research – a sister trading firm he also co-founded – misused client funds. On Nov. 22, attorneys told Delaware bankruptcy court that Bankman-Fried ran FTX as a “personal fiefdom,” describing the company’s massive real estate deals in the Bahamas (where it is headquartered) and bluntly stating that a “substantial amount” of its assets “have been stolen or are missing.” The effects of the meltdown trickled down to Congress, as Bankman-Fried funneled millions in political donations to Democrats and Republicans alike while lobbying Washington on behalf of the cryptocurrency industry.

In the first half of the interview, Sorkin pressed on about the connection between FTX and Alameda, with Bankman-Fried repeatedly arguing that he had no idea what was going on in the latter deal. “I was nervous, because of the conflict of interest, being too involved,” he said. “I didn’t have the bandwidth to run two companies at the same time.” At issue are the huge loans of customer money that FTX made to Alameda to cover the company’s mounting losses, which – as with nearly every bad decision that has come to light – Bankman-Fried framed as a mistake rather than a mistake. deliberate transgression. “I didn’t intentionally mix funds,” he said.

On the issue of the charges or staying out of the US for fear of arrest, Bankman-Fried said he believed he could travel freely and had considered it. “I personally don’t think I have [criminal liability]”, he noted, although he stated that “this is not what I am focusing on”, because “what matters here are all the customers”. He speculated that he might eventually answer questions at a congressional hearing. Billionaire Mark Cuban recently told TMZ that if he were in the younger man’s shoes, he “would be scared of going to jail for a long time.”

Agree to go live with the New York Times seems like bad legal strategy for someone under the intense scrutiny that Bankman-Fried is facing, but it’s not unusual for the 30-year-old former billionaire. On November 18, he was dismissed by his lawyers at Paul Weiss, who claimed conflicts of interest in representing him and also complained that he was self-sabotaging with “incessant and disruptive tweets.”

Asked by Sorkin what his current lawyers thought of him agreeing to the interview – a question that drew laughs from the audience – Bankman-Fried indicated they were strongly against it, adding: “I have a duty to speak up and explain what happened.”

Bankman-Fried now claims to only have $100,000 in the bank, and has told Sorkin that he only has one working credit card. Some cryptocurrency watchers believe he has much larger sums hidden away. “I have no hidden funds here,” he insisted.

O Schedules and other major media outlets were also criticized for continuing to write what some consider “bits” about the disgraced businessman, and several prominent investors were outraged that the The paper again gave him a huge platform to weave his own narrative around FTX’s sudden demise. Before introducing Bankman-Fried, Sorkin defended the journalistic importance of the interview, calling it “one of the most important” of the day.

Sorkin read early on from an angry letter from a man who claimed to have lost his life savings in FTX – about $2 million – but for the most part, Bankman-Fried was amply able to talk about the implosion of the stock market due to a risk failure. administration, continually expressing surprise at the speed and scale of the accident. Several times he simply claimed not to have access to relevant information or details.

At the end of the interview, Sorkin asked if he had been sincere during their discussion. Stammering a bit instead of saying “yes,” Bankman-Fried finally came up with a not-so-comforting phrase.

“I was as sincere as I know how to be,” he said.

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