“Look, I’ve had a bad month.” – Sam Bankman-Fried (SBF)
“I didn’t knowingly commit fraud.”
“I didn’t knowingly commingle funds,”
Those are just some quotes from one of the most important and sought-after nights for those in the cryptocurrency space. Disgraced former FTX founder and CEO Sam Bankman-Fried decided to attend the DealBook Summit 2022 virtually.
There, he was questioned by CNBC’s Andrew Ross Sorkin. It was less a financial interview and more like we watched a Law & Order deposition scene.
People want answers and want to know what happened earlier this month, and Mr. Sorkin tried his best to get some answers. We’re going to highlight some of the most important parts – so make sure you come back this evening as we’ll be updating this throughout the night.
Does SBF feel like he did anything wrong?
If there’s one question that SBF kept dodging and never really answered, it was the repeated attempts by Sorkin to get an answer to the comingling of funds between Alameda Research and FTX.
SBF side-swept most of those questions but did, at least once, confirm that there was no co-mingling of funds.
Regarding personal responsibility, SBF said, “Listen, at the end of the day I was CEO of FTX, whatever happens, I had a duty to everyone. To do right by them. Clearly, I didn’t do a good job of that, and made a lot of mistakes I wouldn’t ever do again.”
On a positive note, according to SBF’s knowledge, entities like FTX US, FTX Japan, FTX Australia, and FTX Europe are fully solvent. SBF said several times that FTX US is, to his knowledge fine and that there is no reason why people couldn’t withdraw their assets right now.
Later in the interview, SBF said he was confused as to why FTX.US was not processing withdrawals.
The relationship between Alameda Research and FTX
Sorkin cited past questions from Bloomberg to SBF about his relationship with Alameda and FTX. Not just the business side but the personal side. Sorkin asked if Alameda people lived in his (SBF) penthouse with FTX employees.
SBF said, “I did live with some team members of Alameda for a while.” However, he denied living at the penthouse currently.
Sorkin pressed SBF on how he had access to customer funds and Alameda funds – something SBF didn’t clearly answer.
The most detailed response SBF made was, “Look, I wasn’t running Alameda, I didn’t know what was going on, I didn’t know the size of their position. These are things I’ve been learning over this month.”
Sorkin again inquired about the FTX and Alameda relationship and how it started immediately and never stopped. SBF’s response was, “… in 2019, they were very connected – Alameda was the primary liquidity provider for FTX at that time. Scroll forward to 2022, it was down to 2% of volume (from 40%).”
When did SBF know shite hit the fan?
Sorkin asked when SBF first knew there was a problem.
SBF: “The time that I really knew there was a problem was Nov 6th. Nov 6th was the date that the Tweet about FTT came out. And by late on Nov 6th, we were putting together all the data and info that obviously should have been put together way later.
And, you know, we looked at that, there was a potentially serious problem there. Alamedas position was big on FTX, it had taken a huge hit, and we’re seeing a run on the bank’s start.
$4 billion in client withdrawals a day. At that point, we were looking for sources of financing.
Rewind a few days before, I was a little bit nervous, but not like this.
Nov 2nd, I was worried there would be substantial losses for Alameda. I didn’t think it was going to be a massive loss for FTX customers. More like Alameda is going to be really tight on funds.
I never tried to commit fraud to anyone. I was shocked at what happened this month.”
The value of the collateral
SBF was asked about the collateral FTX used. “Let’s talk about collateral. Clearly, you were using FTT, Solana, and other tokens as collateral, which required you to mark them with a value a certain way. Do you think you were marking them property?”
SBF’s response: “In Alameda’s case, I don’t think I was marking them according to a good risk perspective. I think that I don’t have any strong statements over what value they have, but clearly, I was not nearly cautious enough from a downside perspective or extreme downside perspective.
In my head, I was looking at a 30% down move as an extreme like we have seen before like we have seen once before, but instead, we had a 95% down move in the course of a year and a 60% down move in a few days with little liquidity.”
When asked about how much Alameda borrowed from BlockFi, SBF said, “maybe a hundred million?”
What does SBF think about his future?
Sorkin asked, “I’m curious on a personal level, to the degree that there’s been a lesson in this; what do you see as your future at this point? And I know you’re an optimist, but where do you think, realistically, is your future?”
SBF answered with, “So *long pause* what is my future? I don’t know. When we fast forward, I have no idea what I’ll be doing a long time from now. What am I thinking? I don’t know what is gonna happen; a lot is not in my hands right now.
I want to be helpful as much as where I can to help FTXs customers. I want to help wherever I can, which can bring a lot more value to those customers.
I don’t know where that will lead – before filing (bankruptcy), there was a lot of interest in financing, a lot of strong interest. I can’t make any promises about anything, but I had thought there would be a pathway forward here instead of if we had just sold off. It’s not in my hands.
But I think that it would make sense to be exploring that. I think there’s a chance that customers may be made a lot more full or even fully full.”
We’ll update this article further this evening – thank you for reading and for your patience!