Home Startups SBF Claims Massive Ignorance of Clear Conflicts in FTX’s Demise • businessroundups.org

SBF Claims Massive Ignorance of Clear Conflicts in FTX’s Demise • businessroundups.org

by Ana Lopez
0 comment

‘I never did “I was shocked by what happened this month,” said Sam Bankman-Fried (SBF), the founder and former CEO of the fallen FTX, at the The New York Times annual DealBook Summit in an interview with Andrew Ross Sorkin.

One of the biggest questions surrounding this debacle is whether there was any misuse of funds between Alameda and FTX. For some context, Alameda started struggling to pay back lenders as crypto prices started to fall. As a result, it used FTX client funds to sanitize lenders; a move that both demonstrated Alameda’s lack of assets, and caused part of the crash as FTX clients began the crypto exchange equivalent of a run on the bank.

At Sorkin’s urging, SBF said he was not “knowingly mixing funds” between Alameda and FTX. “Given the size of the feature, I don’t think it was our intention, in fact it was significantly more interconnected than I would have ever wanted,” he said.

“A lot of what we ended up doing and focusing on was a distraction from an incredibly important area where we completely failed: that was risk,” SBF said. “That was risk management, client position risk and quite frankly conflict of interest risk.”

The entrepreneur said he didn’t specifically entrust anyone with oversight of the Alameda and FTX relationship, a misstep consistent with the fact that FTX, despite being valued at $32 billion, has also never had a board of directors. It was his duty, he explained, to think more about the financial interdependence – though he offered as an excuse, somewhat ironically, the fear that by looking too closely at the relationship he would risk his ownership conflict in both . entities.

Some see FTX’s collapse and SBF’s mistakes along with the team that conspired alongside him as a pivotal moment affecting overall confidence in the cryptocurrency space – a world already going through a winter as Bitcoin and Ethereum prices shake .

SBF, meanwhile, remains a vocal type of singer, and many were surprised that he decided to do the NYT interview in the first place. During the interview, SBF, while sipping (and spilling at least once) from a La Croix in the Bahamas, claimed several times that he didn’t know how certain aspects of the company, from the tires to eventual bankruptcy, went so wrong. When Sorkin asked what SBF’s lawyers advise him to do, he said “they certainly don’t” in support of his participation in the interview.

“The classic advice is to say nothing, to crawl into a hole,” said SBF, when asked about his lawyer’s position on whether he should do interviews now. “I don’t see what is accomplished when I’m locked in a room and pretend the outside world doesn’t exist.”

SBF’s fall from grace is heavily chronicled as many wait to see if he will be charged with the possible crimes in question. The entrepreneur resigned his position earlier this month and was succeeded by Enron spin-down veteran John J. Ray III. In a filing, Ray said he had never in his career seen “such a complete failure of corporate controls and such a complete absence of reliable financial information as here.”

The entrepreneur also addressed his leaked DMs from a conversation with a Vox reporter, declaring bankruptcy as one of his biggest regrets. In the text exchange, he also made flippant remarks, even going so far as to say “fuck regulators.”

“It wasn’t meant to be a public interview, it was an old friend of mine who I stupidly forgot was also a reporter,” he said. “I thought I was speaking in a personal capacity.”

In that Vox interview, he added that regulators “make everything worse” and they don’t protect customers at all. In the heyday of FTX, SBF was a frequent visitor to Capitol Hill, advising U.S. lawmakers on cryptocurrency regulation. Speaking to Sorkin, SBF said he has “probably spent thousands of hours in DC” meeting with regulators.

Speaking of personally, SBF did say he talked to his parents, who are both lawyers about FTX. There are allegations that his parents got a vacation home in the Bahamas with FTX money; “It wasn’t meant to be long-term property, it was always meant to be company property… and I think it’s going to end up there… I think that’s where they stayed.”

SBF says he is not focusing on criminal liability, although there will be “time and place” for him to reflect on himself and his own future. “I’ve had a bad month…but that’s not what’s happening here…what matters is all stakeholders in FTX.”

When asked directly if he would stay in the Bahamas for fear of government intervention if he returned to the US, Bankman-Fried claimed that he was not motivated to stay where he is because of that fear. Instead, he said he “could.” [his] knowledge” to return to the US at will.

Towards the end of the interview, SBF said he has very little money left; including only one working credit card. He thinks he still has about $100,000 in a bank account.

“I can’t promise anything, but I would have thought there would be an opportunity here for a path forward that would deliver more value to customers than what would happen if you just sold everything for scrap,” he said. . “It’s not in my hands to a large extent, but I would think it would make sense to explore that because I think there’s a chance that customers will eventually become much more complete, maybe even complete if there’s a concerted effort. ”

As Sorkin referred to at the beginning of his interview, when he read a letter from a reader who lost millions in the collapse of FTX, the implosion of the company has wiped out some people’s entire savings. It is not yet clear whether those people will see their money back.

“There are examples of this in crypto history,” SBF said.

He was referring to the hack of the crypto exchange Bitfinex, in which 94,000 bitcoins were stolen in 2016. Earlier this year, the DOJ seized the stolen cryptocurrency and Bitfinex began cooperating with US authorities to help customers get their money back.

In the past month, FTX fell from the third-largest crypto exchange to 233rd, according to CoinMarketCap Data. FTX US division is 243rd. The third largest crypto exchange, after Coinbase and Binance, is now Kraken – which itself cut 1,100 jobs earlier today.

Darrell Etherington contributed to reporting to this piece.

You may also like

About Us

Latest Articles