On Wednesday, the former CEO of the defunct cryptocurrency exchange FTX said he did not “knowingly” misuse customer funds and that he expects his millions of irate customers to be compensated in the long run.
Sam Bankman-Fried made these statements to Andrew Ross Sorkin at a conference The New York Times hosted. Since FTX’s demise in the middle of November, Bankman-Fried has done several interviews with the media. Still, his interview with Bloomberg on Wednesday was the first video interview he’s given since the company filed for bankruptcy on November 11.
“I didn’t ever intend to deceive anyone. The events of this month shocked me “Says Bankman-Fried.
When customers tried to withdraw their assets all at once from FTX, the company collapsed in the cryptocurrency equivalent of a bank run caused by growing doubts about the company’s financial strength and its affiliated trading arm, Alameda Research. After the cryptocurrency exchange FTX collapsed, the new management blamed a “complete failure of corporate controls” on the previous administration.
Bankman-Fried claimed responsibility for FTX’s demise, admitting he had miscalculated the level of risk being taken by FTX and Alameda combined. Bankman-Fried is accused, among other things, of conspiring with Alameda to place market bets using customers’ FTX assets. Bankman-Fried assured Sorkin that he did not “knowingly” mix client funds with Alameda’s.
Customers’ deposits at regulated exchanges like FTX should be kept separate from their market wagers. MF Global is just one example of a financial institution that got into legal trouble about ten years ago for mishandling customer deposits. “I had a duty to our stakeholders, our customers, our investors, and the regulators of the world to do right by them,” Bankman Fried said.
When pressed by Sorkin, Bankman-Fried said that, in his opinion, the U.S. affiliate of FTX was completely solvent and could begin processing withdrawals immediately. When asked about the future of customer funds in the rest of FTX, which is much larger than the U.S. division, he said he had little say.
In the wake of FTX’s demise, Bankman-Fried, once one of the world’s wealthiest individuals, claims to have less than $100,000 to his name. In the meantime, he’s making do in the Bahamas with a single credit card.
