Crypto: Former boss of bankrupt FTX platform apologizes but denies fraud

Former FTX CEO Sam Bankman-Fried at the New York Times conference November 30, 2022 in New York. (Michael M. Santiago/Getty/AFP)

The former head of trading platform FTX said he was “deeply sorry” on Wednesday after the company went bankrupt, but denied committing fraud.

“I deeply regret what happened,” Sam Bankman-Fried said in his first public interview since the FTX default.

Engulfed in a wave of panic that prompted users to massively try to withdraw their funds from the platform, FTX initially suspended withdrawals before being forced to file for bankruptcy on November 11.

“I was the managing director of FTX, which means that no matter what happened, I had an obligation to protect the interests of shareholders and clients,” the former manager admitted, answering a question as part of a New York Times conference.

“I clearly made a lot of mistakes that I would give anything today to be able to correct them,” continued the 30-year-old, dressed in his usual dark T-shirt.

Sam Bankman-Fried is suspected of using funds deposited on the platform by FTX customers with his employees to conduct speculative financial transactions with his other company, Alameda Research.

If proven, these facts can lead to criminal prosecution.

At the time of filing for bankruptcy, Alameda’s receipts without explicit authorization from FTX customer accounts had reached approximately $10 billion, according to the Wall Street Journal.

Several US media outlets have reported that over a billion dollars of that amount is untraceable today.

“I didn’t intend to cheat anyone,” said the entrepreneur, with thick, curly hair that contributed to his image as an iconoclast genius.

“I didn’t try to mix funds” and use money owned by clients to make risky investments without their knowledge, Sam Bankman-Fried insisted on video duplex from the Bahamas, where FTX is headquartered and where it still is.

Risks are ignored

During the interview, Sam Bankman-Fried appeared overwhelmed by the events and seemed to have only a partial understanding of the underside of FTX’s failure.

Former FTX executive Sam Bankman-Fried at the New York Times conference on November 30, 2022 in New York City. Former FTX CEO Sam Bankman-Fried at the New York Times conference November 30, 2022 in New York. (Michael M. Santiago/Getty/AFP)

“I didn’t run Alameda,” he said, even though he was a major shareholder. “I didn’t know the size of their position,” that is, the amount borrowed from FTX, assured this graduate physicist from the prestigious Massachusetts Institute of Technology (MIT).

Sam Bankman-Freed’s successor, John Ray III, criticized FTX’s management in mid-November and described the centrally controlled company as “in the hands of a very small group of inexperienced, inexperienced and potentially corrupt individuals.”

It’s an “unprecedented” case, added Mr. Ray, who nonetheless managed the fiat of several large bankrupt groups in the past, notably energy broker Enron, who is often regarded as a benchmark on the subject.

Asked about a possible appearance in court, Sam Bankman-Fried explained that he “(concentrated) on that, adding that his lawyers had advised him not to speak in public.

He said he was more interested in “trying to do everything (his) best to help” the platform’s investors and clients.

By far the most prominent personality in the world of cryptocurrencies, Sam Bankman-Fried has embodied the future of the sector for some, especially since he has said he favors increased regulation.

When he was credited with a fortune estimated at $26 billion based entirely on FTX and Alameda’s valuation, the young man lost everything due to the bankruptcy of his platform.

“A lot of what we did was a distraction” that distracted us from “an incredibly important issue where we completely failed: risks,” acknowledged Sam Bankman-Fried.

“Risk Management, Risks Associated with Client Investments or Conflicts of Interest”, detailed “SBF”.

The failure of FTX has greatly shaken the cryptocurrency universe and prompted several platforms to suspend customer withdrawals.

Cryptocurrency loan specialist BlockFi filed for bankruptcy on Monday.

The sequence revealed, like the following spring, the explosion of the Terra digital currency, the interconnection of a number of platforms that were often provided to each other without sufficient guarantees.

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