By Olga Kharif and Hannah Miller
Sam Bankman-Fried, the disgraced founder of the bankrupt FTX crypto empire, denied trying to perpetrate a fraud while admitting to many errors at the helm of the company.
“I made a lot of mistakes,” the 30-year-old said on Wednesday by video link at the New York Times DealBook Summit. “There are things I would give anything to be able to do over again. I didn’t ever try to commit fraud on anyone.”
He was speaking in an interview with Andrew Ross Sorkin, a columnist for the newspaper, who said Bankman-Fried was joining from the Bahamas. It was his first video interview since FTX filed for bankruptcy protection on November 11.
“Whatever happened, why it happened, I had a duty to our stakeholders, our customers, our investors, the regulators of the world, to do right by them,” the failed crypto boss said.
Bankman-Fried’s participation has sparked controversy given the damaging fallout from the collapse of the FTX exchange and sister trading house Alameda Research. Among the outstanding questions are how Bahamas-based FTX ended up with an $US8 billion ($11.8 billion) hole in its balance sheet and whether it mishandled customer funds, amid reports that FTX lent client money to Alameda.
The failed entrepreneur told the summit that he “didn’t knowingly commingle funds.” At the same time, he said that FTX and Alameda were “substantially more” linked than intended and that he failed to pay attention to the trading house’s margin position, describing it as “too large.” He said he wasn’t running Alameda and added that we was “nervous about a conflict of interest.”
‘Look, I’ve had a bad month. This has not been any fun for me, but that’s not what matters here.’Sam Bankman-Fried
When Sorkin queried whether there were times when he had lied about the business, Bankman-Fried did not provide a straight answer.
Some observers speculate Bankman-Fried’s public comments could be used against him in litigation. The fallen former FTX chief executive faces a complex web of lawsuits and regulatory probes into alleged wrongdoing.
“Look, I’ve had a bad month. This has not been any fun for me, but that’s not what matters here,” Bankman-Fried told Sorkin after he was asked what he thought his personal liability was.
“What matters here is the millions of customers, what matters here is all the stakeholders in FTX who got hurt, and trying to do everything I can to help them out.”
‘The Lehman moment within crypto’
The digital-asset sector is braced for widening contagion from FTX, which once boasted a $US32 billion valuation before sliding into bankruptcy on November 11. It owes its 50 biggest unsecured creditors a total of $US3.1 billion and there may be more than a million creditors globally.
A crypto lender, BlockFi, filed for bankruptcy on Monday after being buffeted by the wipeout. Embattled brokerage Genesis is striving to avoid the same fate.
BlackRock Chief Executive Larry Fink said earlier at the summit that most crypto companies will probably fold in the wake of FTX’s collapse. The world’s biggest asset manager was among firms stung by the chaotic unravelling of Bankman-Fried’s tangled web of 100-plus FTX-related entities.
Bankman-Fried has provided convoluted and incomplete explanations on social media and in interviews with other news outlets about what led to FTX’s woes. Advisers overseeing the ruins of his business have slammed non-existent oversight and the misuse of client funds.
FTX’s new Chief Executive Officer John J. Ray III, a turnaround and restructuring expert, who formerly oversaw the liquidation of Enron, told the bankruptcy court in the US that he’d never in his career “seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information.”
As if such travails weren’t enough, the exact breakup of a $US662 million outflow from FTX as it tumbled into bankruptcy remains a mystery.
Treasury Secretary Janet Yellen, another speaker at the summit in New York, called the FTX debacle “the Lehman moment within crypto,” referring to the collapse of investment-banking giant Lehman Brothers in 2008.
Crypto markets have stabilised somewhat after lurching lower in November as the turmoil around FTX thickened. Even so, a gauge of the top 100 tokens is down more than 60 per cent this year, hit by tightening monetary policy and a series of crypto blowups of which FTX is the most spectacular.
Along with his crypto empire and the funds of its investors, Bankman-Fried’s own personal wealth has evaporated. Once hailed as a crypto billionaire wunderkind, he said during the interview that he’s now down to one credit card and $US100,000 in the bank.
Bloomberg, with staff reporter
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