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Former FTX CEO Sam Bankman-Fried has opened up about the now-bankrupt exchange’s dramatic fall from grace.
In what is the disgraced founder’s first audio interview since FTX’s collapse, Bankman-Fried denied claims that he created a “back door” to move US$10 billion in customer funds from FTX to Alameda as reported by Reuters, who cited two people familiar with the situation.
“I certainly didn’t build the back door in there and I don’t know exactly what they’re referring to,” Bankman-Fried told crypto whistleblower Tiffany Fong who conducted the interview, adding that he could not have built a backdoor because he “don’t even know how to code”.
Bankman-Fried had previously told Reuters via text that he “disagreed with the characterization” of the US$10 billion transfer, and said that that FTX had “confusing internal labelling and misread it”. When asked about the missing funds, Bankman-Fried merely responded with “???”.
On what ultimately caused FTX’s failure, Bankman-Fried admitted that he “definitely should have been more cautious and careful”.
“It was a combination of the crash in the spring that took 50% out of asset values, combined with a hyper-correlated crash scenario this month in which simultaneously we saw a 50% decline in relevant asset prices over a two-day period, combined with a complete run on the bank on FTX, combined with the fact that there’s a margin position on FTX that was substantially larger than it appeared to be,” he explained.
Bankman-Fried also added that the “the combination of all of those put together meant that what appeared to be an extremely well-capitalized position on the exchange, over the last six months, became effectively unable to meet its liquidity obligations, and then those were demanded at the same time.”
He also took the opportunity to explain why the exchange reopened withdrawals exclusively for residents of the Bahamas for a brief period after pausing withdrawals for other users.
“I gave [the Bahamian government] a one-day heads up that we were going to do it. They didn’t say, yes or no. They didn’t respond, and then we did it. The reason I did it was it was critical to the exchange being able to have a future,” he said.
“You do not want to be in a country with a lot of angry people in it and you do not want your company to be incorporated in a country with a lot of angry people in it,” he explained, adding that FTX was just “trying to create a regulatory pathway forward for the exchange just to like kind of appease the citizens of the country that we’re currently in”.
When asked if FTX would still be fine if CZ hadn’t express concerns, Bankman Fried responded: “There would have been risks…I don’t know for sure. That’s a good question.”
“I think things would certainly be a lot more stable and a lot more ability to generate liquidity, but there would still be too much margin in the system. I think it’s kind of 50-50,” he added.
Fong concluded the interview by asking if Bankman-Fried felt remorseful.
“I live this everyday, like I wake up each day and think about what happened…other people don’t see or have that,” Bankman-Fried said.
“I don’t know what the future will hold for me. It’s pretty unclear, and it certainly isn’t the future I thought it was,” he continued, adding that what matters now is “the world’s future” and “the damage I caused”.
Fong then asked if that was his media response or if he actually felt that way to which Bankman-Fried responded: “That’s actually how I feel”.
“I feel really really bad for the people who trusted and believed in me. We’re trying to do great things for the world and tie it to me and that got undermined, so I f*cked up. That’s the sh*ttiest part of it,” he sighed.
“Any apology from me would ring hollow… no one gives a sh*t right now… I don’t know, sh*t’s complicated… it is what it is,” he mumbled.
