5.1 C
New York

Sam Bankman-Fried Blames ‘Huge Management Failures’ for FTX Collapse

Published:

Sam Bankman-Fried, the founding father of the FTX cryptocurrency exchange, made his first public appearance on Wednesday since his business empire imploded this month, insisting that he “didn’t ever attempt to commit fraud” and repeatedly saying he didn’t know the extent of what was occurring inside his crypto businesses.

In a live interview at The Latest York Times’s DealBook conference in Manhattan, Mr. Bankman-Fried blamed “huge management failures” and sloppy accounting for the collapse of his $32 billion company, which has sparked civil and criminal investigations.

Those investigations are focused on whether FTX broke the law by lending its customers’ funds to a trading firm, Alameda Research, which Mr. Bankman-Fried also owned. Speaking via a video feed from the Bahamas, where FTX was based, the 30-year-old said he didn’t “knowingly commingle funds.” At one other point, he said, “I didn’t know exactly what was occurring.”

Mr. Bankman-Fried also took responsibility for the collapse. “Look, I screwed up,” he said. “I used to be C.E.O.”

FTX disintegrated practically overnight after it was unable to satisfy a run on deposits that left the corporate with an $8 billion hole in its accounts. Inside per week, the crypto exchange filed for bankruptcy.

Traders have lost billions of dollars that they stored on the platform, which served as a marketplace for crypto enthusiasts to purchase and sell tokens. Corporations with ties to FTX have also found themselves on shaky financial footing. On Monday, the crypto lending firm BlockFi filed for bankruptcy, blaming its links to FTX.

The sudden collapse of the crypto exchange has left the industry stunned.

  • A Spectacular Rise and Fall: Who’s Sam Bankman-Fried and the way did he turn out to be the face of crypto? The Every day charted the spectacular rise and fall of the person behind FTX.
  • Clinging to Power: Emails and text messages show how FTX lawyers and executives struggled to influence Mr. Bankman-Fried to present up control of his collapsing company.
  • Collateral Damage: BlockFi, a cryptocurrency lender that targeted atypical investors looking forward to a chunk of the crypto mania, filed for bankruptcy on Nov. 28, felled by its financial ties to FTX.
  • A Symbiotic Relationship: Mr. Bankman-Fried’s built FTX partly to assist the trading business of Alameda Research, his first company. The ties between the 2 entities at the moment are coming under scrutiny.

Mr. Bankman-Fried, who became a billionaire as FTX soared and was viewed as a wunderkind, faces significant legal trouble. The Justice Department and the Securities and Exchange Commission are investigating FTX’s transfer of funds to Alameda. The chief executive of Alameda, Caroline Ellison, told staff this month that the trading firm had dipped into FTX customer funds to finance its own trading activity, The Times and others have reported.

Mr. Bankman-Fried has since come under heavy criticism. In court filings, FTX’s recent chief executive, who’s managing the corporate’s bankruptcy, said he had never seen “such a whole failure of corporate control” and listed a series of “unacceptable management practices.”

On Wednesday, Treasury Secretary Janet L. Yellen called FTX’s collapse a “Lehman moment” for the cryptocurrency industry, referring to the bankruptcy of the Wall Street bank Lehman Brothers in the beginning of the 2008 financial crisis. She indicated that she viewed cryptocurrencies with skepticism, calling them “very dangerous assets” and adding that she was thankful that their recent volatility had not spilled over into the mainstream banking sector.

For somebody facing possible criminal charges, Mr. Bankman-Fried has been surprisingly willing to talk publicly. Because the crisis unfolded in early November, he posted a series of apologetic tweets — statements his lawyers later chastised him for making, he has said. Two days after FTX’s bankruptcy filing this month, he spoke with The Times for greater than an hour about how he had managed his business empire while dodging questions on his company’s use of customer money.

On the video stream on the DealBook conference, Mr. Bankman-Fried, wearing a black T-shirt, fidgeted at times, as he often does during interviews. He said he was speaking publicly against the recommendation of his lawyers, who’ve instructed him to maintain quiet and “recede right into a hole.” He said he had decided to disregard their advice.

“That’s not who I’m,” he said. “I even have an obligation to speak.”

The connection between FTX and Alameda had long been a source of criticism. Alameda traded heavily on the FTX platform, meaning it sometimes benefited when FTX’s other customers lost money, raising a conflict of interest. Mr. Bankman-Fried lived with Ms. Ellison in a penthouse within the Bahamas, and at times the 2 were romantically involved.

Mr. Bankman-Fried claimed he was “nervous a couple of conflict of interest” with Alameda, and distanced himself from its operations partly for that reason.

In addressing the impact of the corporate’s collapse on his own future, he was understated. “I’ve had a foul month,” he said at one point, to laughter from the audience.

Mr. Bankman-Fried also said the crisis had reduced his net value to about $100,000. “I don’t have any hidden funds,” he said. “I put the whole lot I had into FTX.”

FTX has also come under scrutiny for a way it spent money, including a $300 million outlay on real estate within the Bahamas. On the conference, Mr. Bankman-Fried defended the spending, saying he was attempting to recruit top-level talent to the Bahamas.

But he declined to talk intimately about his possible criminal liability. “There’s a time and a spot for me to take into consideration myself and my very own future,” he said. “I don’t think that is it.”

The broad impact of FTX’s collapse was on display outside the conference venue, where a small group of protesters gathered; one carried an indication that said Mr. Bankman-Fried “robbed us all.”

But as Mr. Bankman-Fried spoke, an commercial flashed at the highest of a constructing visible behind the venue. “Buy stuff,” it said. “Get crypto rewards.”

Ryan Mac contributed reporting.

sportinbits@gmail.com
sportinbits@gmail.comhttps://sportinbits.com
Get the latest Sports Updates (Soccer, NBA, NFL, Hockey, Racing, etc.) and Breaking News From the United States, United Kingdom, and all around the world.

Related articles

spot_img

Recent articles

spot_img