Yahoo Finance 'I've had a bad month': Sam Bankman-Fried defends FTX collapse, deflects blame in bizarre interview he says went against advice of lawyers
In a nearly 90-minute interview at the New York Times Dealbook Summit on Wednesday, disgraced FTX cofounder and former CEO Sam Bankman-Fried said he "didn't try to commit fraud" as his crypto empire collapsed in a matter of days earlier this month.
Speaking with Andrew Ross Sorkin remotely from the Bahamas, Bankman-Fried, known as SBF in the crypto world, stated: "I did not knowingly commingle funds" between FTX and the trading firm Almadea Research, which he also co-founded.
In his first reply, Bankman-Fried asserted: "I didn’t ever try to commit fraud on anyone. I was shocked."
At the beginning of this year, Bankman-Fried's offshore exchange and U.S subsidiary carried a combined valuation of $40 billion, according to data from Crunchbase. By the end of the first quarter, Bankman-Fried's personal wealth had risen to over $25 billion, according to the Bloomberg Billionaire Index.
Less than seven months later, the 30-year-old signed his crypto empire into Chapter 11 bankruptcy and resigned as CEO. FTX and affiliate firms owe more than a million customers an estimated $8 billion — assets it doesn't have on hand.
"I've had a bad month," Bankman-Fried told Sorkin. "This has not been any fun for me. But that's not what matters here. What matters here is the millions of customers, what matters here is the stakeholders in FTX. And what matters is trying to help them out."
Asked about his personal finances, Bankman-Fried said: "I think I might have one working credit card left." In a Tuesday interview with Axios, he said he no idea where his current net worth stood: “Am I allowed to say a negative number?” he joked, later offering he "had $100,000 in my bank account last I checked."
'I did not have the bandwidth'
In the past 30 days, Bankman-Fried has faced financial ruin and become the key subject of both civil and criminal investigations started by the U.S. Justice Department, Securities and Exchange Commission, Texas State Securities Board, as well as Bahamian authorities.
Appearing visibly nervous — at one time spilling a LaCroix on his shirt — Bankman-Fried tried to insist on a lack of understanding about the interconnectedness between FTX and Alameda Trading, including any access to customer funds Alameda may have had.
In Bankman-Fried's telling, from FTX's earliest days, he was concerned about the conflict of interest between the exchange business and Alameda. Bankman-Fried's ignorance about the inner-workings of his own business, in his telling, were presented as a deliberate choice.
"I was worried about the conflict of interest, of being too involved," Bankman-Fried said. "I hadn’t been running Alameda, or thinking about its finances, or making those decisions."
Pressed about the source of profits for his combined businesses, Bankman-Fried said: "I think Alameda made trading profits, but FTX made profits as well. FTX had been growing profitable business."
He added that "I did not have the bandwidth or attention to run Alameda and FTX at once."
'By late November 6, I'm very nervous'
FTX’s whirlwind collapse started as a public spectacle on November 2, when a report from CoinDesk revealed leaked financials of Alameda Research.
Alameda's balance sheet showed not only did the bulk of its $14.6 billion in claimed assets come from holding crypto tokens created by Bankman-Fried enterprises, but also 92% of its $8 billion in liabilities were tied up in loans.
"Clearly I was not nearly cautious enough from the extreme downside perspective," Bankman-Fried said Wednesday, attributing much of his company's downfall to plunging crypto prices over the course of 2022.
In a convoluted and at times circular telling of how FTX ultimately collapsed, Bankman-Fried flagged November 6 as a crucial turning point.
"By late November 6, I'm very nervous that things might end quite badly," Bankman-Fried said. That day Changpeng Zhao, CEO of rival crypto exchange Binance, said his company planned to sell their sizable holdings in FTX’s crypto token, FTT, due to "recent revelations."
The following day, in a since-deleted tweet, Bankman-Fried said: "FTX has enough to cover all client holdings. We don't invest client assets (even in treasuries). We've been processing all withdrawals, and will continue to be."
Behind the scenes, internal communications viewed by the New York Times showed in his final days as CEO, Bankman-Fried insisted he could find a way to keep FTX running despite mounting evidence and FTX lawyers pointing to the opposite.
On Wednesday, Bankman-Fried reiterated his view that there had been "a lot of fairly strong interest" in financing a bailout of FTX right until the bitter end.
By November 11, just five days after Bankman-Fried said he grew "nervous" about problems at his company, FTX had filed for bankruptcy.
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” FTX's new CEO John Jay Ray, the same lawyer responsible for winding down Enron in 2002, said in a November 17 filing.
FTX U.S.
At times on Wednesday, Bankman-Fried took pains to draw a distinction between FTX's U.S. business and its offshore exchange.
Bankman-Fried said FTX U.S. is currently fully solvent "to my knowledge" but did not offer an explanation for why the company filed bankruptcy. At various points, Bankman-Fried suggested FTX's U.S. business could open customer withdrawals today and meet their full obligations. Some insiders have told Yahoo Finance that the businesses may have been too difficult to untangle.
Asked by Sorkin whether he'd considered returning to the U.S., Bankman-Fried said: "I've thought about it" and that "to [his] knowledge" he'd be able to travel back to the U.S.
In reference to hearings scheduled by lawmakers regarding the collapse of FTX, Bankman-Fried said: "I would not be surprised if sometime I am [on Capitol Hill] talking about what happened to our representatives, or wherever else is most appropriate."
Asked by Sorkin whether his legal team had been advising him to give an extensive interview to the New York Times, Bankman-Fried said: "No, they are very much not. The classic advice, right, don't say anything, recede into a hole. That's not who I am, that's not who I want to be. And I think I have a duty to talk."
An interview between Bankman-Fried and George Stephanopoulos is set to air on Good Morning America Thursday morning.
'I don't know what my far future is'
Asked about his future on Wednesday, Bankman-Fried said: "I don't know what my far future is. When you fast forward I have no idea what I'm going to be doing a long time from now." He then steered the discussion back towards his desire to be "helpful wherever I can" in getting customer funds returned.
Near the end of the interview, Sorkin asked Bankman-Fried what he'd tell customers of other exchanges who were concerned about the safety of their assets.
"So, look, I don't know exactly what's going on at other exchanges," Bankman-Fried said. "I can tell you what I would think as a customer — look for the things FTX should've been able to supply."
When asked by Sorkin whether Bankman-Fried had been truthful during his interview on Wednesday, the disgraced founder demurred.
"I was as truthful as I'm knowledgable to be," Bankman-Fried said. "There are some things I wish I knew more about, but yes I was."
When pressed if Bankman-Fried agreed that he had lied at times during his leadership of FTX, Bankman-Fried said: "I don't know of times when I lied," — also conceding that there were times he served as a "marketer" for FTX's various businesses.
"I wish I'd spent more time dwelling on the downsides and less time thinking about the upsides," Bankman-Fried said.
David Hollerith is a senior reporter at Yahoo Finance covering the cryptocurrency and stock markets. Follow him on Twitter at @DsHollers
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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