Sam Bankman-Fried Says He Didn’t Commit Fraud
Sam Bankman-Fried said in a Wednesday press appearance that he’s innocent of the fraud allegations surrounding the catastrophic multi-billion-dollar collapse of his cryptocurrency-exchange company.
Since the implosion, the fallen tech genius has been accused of misusing customer funds deposited with FTX to artificially prop up another one of his enterprises: a crypto hedge fund, Alameda Research, which he operated simultaneously while seemingly evading financial ethics scrutiny.
“Bankman-Fried’s trading giant Alameda rests on a foundation largely made up of a coin that a sister company invented, not an independent asset like a fiat currency or another crypto. The situation adds to evidence that the ties between FTX and Alameda are unusually close,” website CoinDesk reported in early November.
Speaking at the New York Times’ Dealbook Summit with Andrew Ross Sorkin, Bankman-Fried insisted that he “didn’t ever try to commit fraud” by laundering FTX monies to support his sister trading firm.
“I was shocked by what happened this month,” he added.
It has been alleged that Bankman-Fried secretly transferred $10 billion of FTX customer funds to Alameda Research, Reuters reported. Alameda reportedly had to scramble to pay lenders back as crypto prices began plummeting. To cover the debts, Alameda allegedly used FTX customer funds, exposing a lack of assets. Bankman-Fried said today that he did not “knowingly co-mingle funds” between Alameda and FTX.
“Given the size of the position, I think it was not our intention, it was, in effect, tied together substantially more than I would have ever wanted to be,” he said. He conceded that he did not assign someone to conduct oversight over the extremely intertwined Alameda-FTX relationship, and that he should have.
On the question of his alleged culpability, the crypto entrepreneur was vague: “The real answer is that’s not what I’m focusing on. There’s going to be a time and place for me to sort of think about myself and my own future.”
In mid November, investors went into a panic when Binance, the world’s largest cryptocurrency exchange, suddenly pulled out of acquisition negotiations with FTX after it found red flags in its financial records. Binance warned that “the issues are beyond our control or ability to help.” Binance founder Changpeng Zhao publicly revealed that FTX had liquidity issues, triggering a bank run on the company and a massive credit crunch.
“By late on Nov. 6 we were putting together all of the data . . . that obviously should have been part of the dashboards I was always looking at,” Bankman-Fried said. “And when we looked at that, there was a serious problem there.”
After a meteoric rise that peaked at $32 billion market value, FTX filed for Chapter 11 bankruptcy protection last Friday. By the age of 30, Bankman-Fried amassed an estimated net worth of nearly $25 billion through his crypto ventures, but he lost it all almost overnight in the implosion of the FTX boondoggle.
