‘I did not try to commit FTX fraud’

By EARYEL BOWLEG

Tribune Staff Reporter

ebowleg@tribunemedia.net

FORMER FTX CEO Sam Bankman-Fried said he did not try to commit fraud and unknowingly commingled funds of his company’s customers with his hedge fund Alameda Research.

Mr Bankman-Fried gave a nearly hour long interview with journalist Andrew Ross Sorkin yesterday at the DealBook Summit in New York City. Live from The Bahamas, he opened up about the crypto giant’s downfall and his transgressions that led to it.

This conversation is the highest profile sit down the embattled former billionaire has given publicly since the collapse of the crypto exchange.

FTX, Alameda Research, and “dozens other affiliated companies” filed a bankruptcy petition in Delaware last month.

 During the interview, Mr Bankman-Fried was remorseful about the turn of events.

 “At the end of the day, I was CEO of FTX and that means whatever happened, why ever it happened - I had a duty. I had a duty to all of our stakeholders, to our customers, our creditors. I had a duty to our employees, to our investors, and to the regulators of the world to do right by them,” he said.

 “To make sure the right things happened at the company and clearly I didn’t do a good job at that.   “Clearly I made a lot of mistakes, things I’d give anything I would do over again. I didn’t ever try to commit fraud on anyone. I was excited about prospects. I was excited about the prospects of FTX a month ago. I saw it as a thriving growing business. I was shocked by what happened this month and you know, reconstructing it.”

 FTX’s swift demise came after CoinDesk, a publication which reports on cryptocurrency, broke the news in early November about a leaked document that appeared to show that Alameda Research, Mr Bankman-Fried’s cryptocurrency trading firm, held an unusually large amount of FTT tokens.

 FTT tokens were created by FTX.

 It is believed that the US Justice Department, Securities and Exchange Commission and Commodity Futures Trading Commission are probing the handling of FTX customers’ funds.

 Pressed on the issue of mixing funds, the 30-year-old answered: "I didn't knowingly commingle funds. And again – you have the margin trading you have, you know, customers borrowing from each other - Alameda is one of those.

 “I was frankly surprised by how big Alameda’s position was which points to another failure of oversight on my part and failure to appoint someone to be chiefly in charge of that but I wasn’t trying to co-mingle funds.”

 Mr Sorkin expressed the opinion that Alameda and FTX appeared to have a connection from the beginning and never stopped.

 While addressing the journalist’s comments, he admitted to an oversight he made.

 Mr Bankman-Fried stated: “Well, I think it had been, in some ways, reducing. I mean, when you throw back to 2019, Alameda and FTX were very connected in a number of ways. You know, one of these it was that Alameda was the primary liquidity provider on FTX. It was, you know, 40 something percent of volume, it was the backstop liquidity provider. And you scroll forward to 2022, it was down to 2 percent of volume, we had a lot of backstop liquidity providers.

 “But it still had a big margin position on and I was failing to pay nearly enough attention to positions and positional risks on the exchange, and to Alameda’s in particular. And I also, frankly, made a mistake that I feel pretty embarrassed to have made. And a lot of things are, but I substantially underestimated what the scale of a market crash could look like and what the speed of it could look like.”

 However, he attempted to distance himself from Alameda.

 “I wasn’t running Alameda. I didn’t know exactly what’s going on. I didn’t know the size of their position. A lot of these are things I’ve learned over the last month that I learned as I was sort of frantically digging into this on November 6, November 7, November 8. And, obviously, that’s a pretty big mistake I made. That’s a pretty big oversight that I wasn’t more aware, I think I was, you know, I was nervous because of the conflict of interest about being too involved, and obviously, that shouldn’t have meant that I didn’t have real oversight, or that really shouldn’t have meant that I failed to point anyone to be in charge of that oversight, that relationship,” Mr Bankman-Fried explained.

 Another concern he was pushed to answer was the New York Times’ report of $515 million suspicious transfers from FTX after the company’s bankruptcy filing.

He indicated there may have been some improper access of assets.

 “I will caveat this by saying at that point, I was being cut off from systems. And so I’ll give you the answer to the extent that I know it, which is that I believe that a few different things happened within a short period there,” Mr Bankman-Fried told the audience.

 “I think that the US team took action to seize some of the assets and put it in custody for the exchange. I believe it’s been announced that the Bahamian regulators took some of the assets into safekeeping as well around that same time.

 “…In addition to both of those also there was some actually improper access of assets on the exchange. And I don’t know the details of that. I don’t have the resources to trace through exactly what happened there. And I don’t know who is behind that third part.”

 Last month, the Bahamas Securities Commission took action to freeze the assets of FTX Digital Markets and related parties. It was further stated the commission also suspended the registration and applied for the appointment of a provisional liquidator of FTX Digital Markets Ltd.

 Mr Bankman-Fried spoke about the commission but did not give any details.

 “So I can’t discuss specifics, but I will note that prior to Chapter 11 having been filed the Bahamian authorities had placed FTX Digital Markets, the Bahamian entity which is the primary operating entity of FTX International, under supervision of a JPL system in The Bahamas with oversight from the Securities Commission of the Bahamas, and, you know, or more to my knowledge, taking actions to protect FTX’s clients and customers there.”

 FTX injected millions of dollars into The Bahamas and one way the crypto currency exchange did so was through real estate. In fact, a Bahamian realtor estimated $250m and “probably more” was spent on the company acquiring New Providence real estate.

 Much has been discussed in the media about this and Mr Bankman-Fried clarified the purchase of the properties. Particularly reports that his parents apparently had been provided with a luxury vacation home.

 He said: “So I don’t know the details of the house for my parents, but I knew that it was not intended to be their long term property - it was intended to be the company’s property. I don’t know how that was papered in and I think that was where it was and will end up. I think they may have stayed there while working with the company sometime over the last year.

 “When you look at the rest of it, there were a lot of property purchases in The Bahamas. You know, the reason for that is we had basically a hundred Silicon Valley, you know, top Silicon Valley employees come down here to work for FTX.

 “We were trying to incentivize that and to, you know, make sure that they had an easy way to find a comfortable life so they’d be willing to move and help build out the product. And so I, you know, those 100 people put together here did end up buying a substantial amount of property. And you feel kind of, I feel bad about some of how those investments turned out for them.”

 Asked why he was in The Bahamas, Mr Bankman-Fried has been in the country for the last year running FTX.

 “You know, I’ve been running FTX Digital Markets, our primary operating entity down here with Bahamian regulators and, you know, and others in contact, and right now I’m looking to be helpful anywhere I can with any of the global entities that would want my help.”

 He did not rule out the possibility of going to the United States to answer questions.

 “I’ve thought about it and I’ve seen a lot of the obviously of the hearings that have been happening. I you know, would not be surprised if you know, some time I am, you know, up there talking about what happened to our representatives or, you know, wherever else is most appropriate.”

Comments

KapunkleUp says...

His numerous idiotic statements aside, I wonder what his current immigration status is.

Posted 1 December 2022, 9:32 a.m. Suggest removal

rodentos says...

permanent resident - any crook with 1 million receives it (instead of looking for real skills)

Posted 1 December 2022, 10:35 p.m. Suggest removal

Proguing says...

So he want us to believe that he had no clue as to what was going on at FTX and Almeda (despite his girlfriend who was running the latter).

Next it will be revealed that he was eating steaks (he claims to be vegan) and he will say that he thought it was cauliflower.

Anyway, since he is living in his $40 million penthouse in Albany, he cannot be arrested since the Bahamas has no extradition treaty with this jurisdiction. So as long as he stays in his penthouse in Albany, he is safe.

Posted 1 December 2022, 10 a.m. Suggest removal

KapunkleUp says...

Government will probably keep him here until he is sucked dry. Only then will he be tossed out.

Posted 1 December 2022, 10:11 a.m. Suggest removal

tribanon says...

This comment was removed by the site staff for violation of the usage agreement.

Posted 1 December 2022, 10:22 a.m.

Sickened says...

Her name does always come up whenever controversy and questionable practices are mentioned.
Bad luck or bad character traits?

Posted 1 December 2022, 11:04 a.m. Suggest removal

ThisIsOurs says...

It is somewhat remarkable

Posted 2 December 2022, 8:22 a.m. Suggest removal

Emilio26 says...

I agree with you that these gated communities on New Providence are basically safe havens for white collar criminals.

Posted 1 December 2022, 7:46 p.m. Suggest removal

rodentos says...

he's whole bs talk is like "it just messed up on itself nobody could know in advance" LOL!

Posted 1 December 2022, 10:39 p.m. Suggest removal

TalRussell says...

Well, yes. In a simplified version of the **illusion of Bahamian prosperity** which launched a long time back in **1492.**

This **"prosperity thing** was and continues to be built on a **Big Whopper lie".**

In 1955 Wallace Groves bought Freeport for **$140,400** (equivalent $1.6 million dollars today) and still was enough to put down **a nominal good faith deposit** to eventually buy the Bay Street Boys.

It's said, in 1971 Robert Vesco bought his Bahamian government for under ""$20 million** ($140 million in 2022 dollars).**

But it's well known that both Groves and Vesco handed out pennies amongst its British Subjects coloured natives.

So, Sam Bankerman-Fried's $300 million real estate acquisition revelation is nothing new.

It only looks to involve lots more **Big Whoppers** but that's due to inflation. Which means it takes lots more dollars to flip today's real estate whoppers. — Yes?

Posted 1 December 2022, 12:09 p.m. Suggest removal

M0J0 says...

we all know once you spend a certain amount in investments your status is secured, almost automatic.

Posted 1 December 2022, 1:18 p.m. Suggest removal

TalRussell says...

Well, yes. if thinks it sounds likes The Revolution with Talk Radio Presenter, Journalist Comrade Juan **"Mr. Carmichael"** is making his own news pertaining to **his not understanding** what's all the fess **those peoples'** whose calling for the return of the **500 Thousands Dollars of clients money** Sam **Bankman*-Fried donated to a local charity.

Well, if you are one **"Those Peoples'"** who shouldn't've been called-out live-on-air for thinkin' **straight,** and precisely so.

Comrade Talk Radio Presenter and Journalist Comrade Juan **"Mr. Carmichael"** needs shift his gears on over to local banks were knee-deep in aiding FTX, — Yes?

Posted 1 December 2022, 1:25 p.m. Suggest removal

GodSpeed says...

What's the saying again.....oh yeah...**"ignorantia legis neminem excusat"** ...ignorance of law excuses no one. Obviously since SBF is politically connected in the US to Democrats they will attempt to get him off the hook. I'm sure a few threats from Joe Biden's government to the Bahamian government will see him walk easily. It's so funny how the mainstream US media has so obviously been treating this guy with extra soft gloves like he's a child, I wonder why? They sure go cutthroat against other people who have done way less damage.

Posted 1 December 2022, 1:43 p.m. Suggest removal

tribanon says...

As I have said before, but The Tribune keeps suppressing, the tracing actions are well underway with the help of U.S. intelligence agencies, especially now that the agenda of the U.S. House of Reps is Republican controlled. The warning signs (red flags and alarm bells) were such that many Bahamians who have been unjustly enriched by BSF/FTX with funds stolen from other people are going to pay a very dear price. And that includes the lawyers, realtors and other advisors who sucked heavily on BSF/FTX without any regard for due diligence requirements or the irregular nature of the transactions they benefited from. They will be deemed by a U.S. court to have known things were not kosher and will face legal proceedings that force them to disgorge their ill-gotten financial gains, no matter where on this planet they may try to hide them.

The first U.S. Congressional hearing on the collapse of FTX was held today and, as expected, was a false given that the real hearings will not begin until the Republican controlled House of Reps takes effect at the start of the New Year. That's when the fireworks will begin in a very big way.

Posted 1 December 2022, 4:50 p.m. Suggest removal

ted4bz says...

Something more sinister is beneath all this, it's just too big and too sloppy not to be. Stay tuned.

Posted 1 December 2022, 7:35 p.m. Suggest removal

rodentos says...

summary of all this:

https://www.youtube.com/watch?v=h29FkWf…

even their software was backdoored to give Alameda an advantage but they still fckd up.... LOL! I call this skills

Posted 1 December 2022, 10:38 p.m. Suggest removal

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