FTX’s Bankman-Fried apologises, denies trying to commit fraud
FTX founder tells conference he made a ‘lot of mistakes’ and is ‘shocked’ by emerging details of exchange’s collapse.
Former FTX Chief Executive Sam Bankman-Fried has apologised for a “lot of mistakes” made in the abrupt collapse of the cryptocurrency firm, saying he did not knowingly behave fraudulently.
“I didn’t ever try to commit fraud on anyone,” Bankman-Fried said on Wednesday at the DealBook Summit, hosted by CNBC and The New York Times.
“I’m deeply sorry about what happened,” Bankman-Fried said. “Clearly I made a lot of mistakes or things I would be able to give anything to be able to do over again.”
Bankman-Fried – appearing by video from the Bahamas and donning his trademark attire of a simple t-shirt – said he was “shocked” by many of the details that surfaced amid FTX’s collapse, depicting the problems as having stemmed from lax oversight and corporate controls rather than an intent to defraud.
He resigned from FTX on November 11, as the cryptocurrency platform filed for bankruptcy protection while facing a large financing shortfall and a deluge of withdrawals from panicked customers. The firm at its peak had been worth some $32bn.
At the time, FTX had taken some $10bn in customer funds without authorisation, according to the Wall Street Journal.
Much attention has been focused on the relationship between FTX and Alameda Research, an affiliated trading firm.
Bankman-Fried acknowledged an “embarrassing” lack of attention to conflicts of interest between the two firms but insisted he was not abreast of the details on Alameda and did not run Alameda.
No ‘existential’ risk
Among the revelations, the digital currency news site CoinDesk reported on November 2 that Alameda’s balance sheet was heavily built on FTT – a token created by FTX and not based on an asset with independent value.
FTT’s value plunged in early November, as both Alameda and FTX cratered, and has not recovered.
Bankman-Fried said he was also surprised at the scale of Alameda’s positions on FTX, which were troubled and ultimately stressed the firm.
“I didn’t think it was existential for FTX,” Bankman-Fried said of Alameda’s financial stress, adding he thought the problem would “end up having some small impact on FTX, but not a significant one, not one that hurt customers at all”.
Bankman-Fried said he did not knowingly “comingle” funds between the two firms.
FTX’s newly-installed CEO John Ray has lambasted his predecessors in a November 17 filing in bankruptcy court.
“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,” Ray said in the filing.
“From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented,” he said.
Bankman-Fried on Wednesday said he was not aware he was the subject of a criminal probe, adding he had rejected his lawyer’s advice to stay silent now.
“I have a duty to explain what happened,” he said. “And I think I have a duty … if there is anything I can do to try and help customers out here.”
Bankman-Fried suggested FTX’s United States investors could recover their losses but did not explain how this might happen.