Even as critics rumor that he was not already in prison, and rumors swirled that he would cancel the risky public appearance, Sam Bankman-Fried, co-founder of the failed cryptocurrency exchange FTX, gave a live video interview to end New York Times‘ DealBook Summit Conference on Wednesday.
Bankman-Fried spoke from the Bahamas, where FTX has its headquarters Times finance columnist Andrew Ross Sorkin, “I never tried to defraud anybody.”
The Securities and Exchange Commission, the Commodity Futures Trading Commission and the US Department of Justice are currently investigating how FTX, once the third largest crypto exchange in the world and valued at $32 billion, collapsed in a matter of days in early November. Binance, a rival exchange that moved to rescue it through an acquisition, subsequently pulled out of the deal, saying FTX̵[ads1]7;s problems were “beyond our control or ability to help.”
Amid the chaos, Bankman-Fried was forced to step down as CEO and allowed the company to file for bankruptcy, but only after days of desperately clinging to power despite company executives urging him to step down.
“I made a lot of mistakes, there are things I’d give anything to redo,” Bankman-Fried told Sorkin in their hour-long conversation, during which he drank a pamplemousse LaCroix, tapped his foot and often kept his eyes rolled downwards. Another of his conclusions: “I’ve had a bad month.”
At one point, pressing him on the irresponsibility of FTX management and reports of the hedonistic luxury they were living in, Sorkin said, “It sounds like a bunch of kids on Adderall having a sleepover.”
“We messed up big time,” Bankman-Fried replied. However, he denied that the FTX team in the Bahamas had a drug culture that was out of control. “At our parties, we played board games,” he said. “I didn’t see any illegal drug use.” He said he has been prescribed medication to help him focus and concentrate.
The smoldering ruins of FTX are now overseen by CEO John J. Ray III, a corporate governance specialist who famously handled the aftermath of the Enron accounting scandal in 2001. In FTX’s bankruptcy filing, he wrote: “Never in my career have I seen such a complete failure in corporate controls and such a complete absence of reliable financial information as occurred here.” Investors were wiped out, there is an unexplained $8 billion shortfall on the balance sheet, and the exchange still owes its top 50 creditors $3.1 billion.
Many hold Bankman-Fried personally responsible for the crisis, and significant questions remain about whether FTX and Alameda Research — a sister trading firm he also co-founded — misappropriated client funds. On Nov. 22, attorneys told Delaware’s bankruptcy court that Bankman-Fried ran FTX as a “personal fiefdom,” describing the company’s vast real estate deals in the Bahamas (where it is headquartered) and bluntly stating that “significant amounts” of the assets “have either been stolen or is missing.” The ripple effects of the collapse reached all the way to Congress, as Bankman-Fried had made millions in political donations to both Democrats and Republicans while lobbying Washington on behalf of the crypto industry.
In the first half of the interview, Sorkin pressed the connection between FTX and Alameda, while Bankman-Fried repeatedly argued that he had little idea what was going on in the latter business. “I was nervous, because of the conflict of interest, to be too involved,” he said. “I didn’t have the bandwidth to run two companies at once.” At issue is the massive loans of customer money that FTX made to Alameda to cover the firm’s mounting losses, which — as with almost every bad decision that has come to light — Bankman-Fried appeared to be a mistake rather than deliberate wrongdoing. “I did not knowingly interfere,” he said.
When asked about charges, or staying outside the United States 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, though he claimed “that’s not what I focus on,” because “what matters here is all the customers.” He speculated that he might eventually answer questions in a congressional hearing. Billionaire Mark Cuban said recently told TMZ that if he were in the younger man’s shoes, he would “be afraid to go to jail for a long time.”
Accepts a seated live stream with New York Times seems like poor legal strategy to some amid the intense scrutiny facing Bankman-Fried, but it’s not out of character for the 30-year-old former billionaire. On November 18, he was dropped by his lawyers at the firm Paul Weiss, who cited conflicts of interest in representing him and also complained that he was self-sabotaging with “incessant and disruptive tweeting.”
Asked by Sorkin what his current lawyers thought of him agreeing to the interview — a question that drew laughter from the audience — Bankman-Fried indicated that they strongly opposed it, adding, “I have an obligation to speak and explain what happened.”
Bankman-Fried now claims to have only $100,000 in the bank, telling Sorkin that he lacks one working credit card. Some cypto-observers believe that he has much larger sums hidden away. “I have no hidden means here,” he insisted.
The Times and other major media outlets have also taken to continuing to write what some consider “puff pieces” about the disgraced entrepreneur, and a number of prominent investors were outraged that the newspaper had again given him a huge platform to weave his own narrative about 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.
Early on, Sorkin read 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 largely able to talk about the stock market imploding because of risk-taking management, who continually express surprise at the speed and scale of the crash. 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 truthful throughout their discussion. Bankman-Fried stuttered a little instead of saying “yes,” and finally landed on a not-so-reassuring sentence.
“I was as truthful as I am knowledgeable,” he said.