​“I made a lot of mistakes.” Former FTX CEO speaks at NY Times’ Summit

What’s new? On November 30, as part of the DealBook Summit hosted by the New York Times, journalist Andrew Sorkin interviewed the former CEO of the failed FTX crypto exchange, Sam Bankman-Fried. He joined the conversation from his residence in the Bahamas, despite advice from his lawyers. During the conversation, Bankman-Fried stuck to the theory that FTX’s collapse was the result of the market crash. The businessman admitted that he began to get nervous after his trading firm’s, Alameda Research, financial statements were disclosed, though he did not suggest it could be dangerous for FTX.

Bankman-Fried’s interview

What else did the former FTX CEO say? According to one theory, Bankman-Fried improperly transferred FTX exchange customers’ funds to the trading firm Alameda, which embezzled them through a series of bad trades. In response to repeated questions from Sorkin about whether he improperly accepted user deposits and lent them to Alameda, Bankman-Fried responded that he “didn’t knowingly commingle funds.”

The entrepreneur attributed the situation with the use of customer assets to an accounting mistake. He said there was a “substantial discrepancy” between the company’s legitimate audited financials and the figures displayed on the exchange’s faulty information tools. “I was frankly surprised,” Bankman-Fried said.

The former FTX chief acknowledged that he had not performed well as CEO of the exchange and had made many management failures. At the same time, he said that he “didn’t ever try to commit fraud on anyone.” Asked if he was worried about criminal liability, Bankman-Fried replied that he has time and space to think about himself and his future.

Although he did not explain how that might happen, the former FTX chief that said customer funds could be recovered in full. Bankman-Fried added that he himself has virtually no funds and has one working credit card left.

Asked what happened to the $515 million that was transferred out of FTX after the bankruptcy filing, Bankman-Fried cited a list of possibilities, including “improper access of assets.”

Bankman-Fried also said that most customers were trading with a margin on FTX. According to him, this is one of the reasons the exchange collapsed. So, when users’ bets became unsuccessful, FTX rushed to close margin accounts, but the losses grew too fast. Their coverage, as well as the rapid withdrawals in early November, emptied the accounts and led to the collapse of the platform.

According to Bankman-Fried, if he made a mistake, it was only in failing to keep track of the size of the unprofitable bets his customers were making. “There was no person who is chiefly in charge of positional risk of customers on FTX. And that feels pretty embarrassing in retrospect,” he said.

Earlier, in a letter to former colleagues, Bankman-Fried allowed the possibility of FTX to recover its activities if new investments were brought in.

Also in November, journalists at Reuters found real estate in the Bahamas with a total value of $121 million among the exchange’s employees. Most of the properties, according to documents, were to be used as “residence for key personnel.”