- Former FTX CEO Sam Bankman-Fried said he'd had a "bad month," but denied committing fraud at his crypto exchange.
- Bankman-Fried spoke at the DealBook Summit weeks after FTX filed for bankruptcy protection amid a cryptocurrency meltdown.
- He also started Alameda Research, a crypto hedge fund that allegedly commingled FTX customer funds with trading funds.
Former FTX CEO Sam Bankman-Fried, in possibly the understatement of 2022, said Wednesday, "I've had a bad month."
The former billionaire added that he "didn't do a good job" at upholding his responsibilities to regulators, customers and investors in a hotly anticipated conversation with CNBC's Andrew Ross Sorkin at the DealBook Summit.
Bankman-Fried's FTX imploded in mid-November after Coindesk reported irregularities on the company's balance sheets. FTX filed for Chapter 11 bankruptcy protection in Delaware on Nov. 11 after an apparent misuse of funds that some have called fraud.
"I didn't ever try to commit fraud on anyone," Bankman-Fried said. "I saw it as a thriving business and I was shocked by what happened this month."
The political megadonor claimed he was down to $100,000 and had one working credit card left.
"We completely failed on risk," Bankman-Fried continued. "That feels pretty embarrassing, in retrospect."
Bankman-Fried appeared by video feed from the Bahamas, Sorkin said.
"I've been in the Bahamas for the last year," Bankman-Fried said when asked about why he remained in the island nation.
Alameda Research borrowed billions of dollars from other crypto exchanges, including now-bankrupt Voyager Digital and BlockFi Lending, despite supposedly having billions of its own crypto for trading.
Sorkin asked Bankman-Fried if it was that exposure that led him to aggressively acquire competitors throughout the year.
Bankman-Fried claimed he believed Alameda had repaid all lines of credit to various borrowing desks by the middle of 2022.
But Alameda still owes BlockFi over $670 million, according to court filings. BlockFi filed for Chapter 11 bankruptcy protection in New Jersey on Monday.
Alameda's exposure to Voyager was considerably higher. Alameda owed Voyager over $1 billion as of Dec. 2021. Alameda and FTX also offered an emergency line of credit to Voyager over the summer. As part of the deal, FTX made itself Voyager's preferred borrower, allowing it to restructure existing loans with Voyager.
"What are your lawyers telling you right now? Are they suggesting it's a good idea for you to be speaking?" Sorkin asked the former billionaire.
"No, they're very much not."
"The time that I really knew there was a problem was Nov. 6," Bankman-Fried said, referring to days after Alameda's sizable FTT position was exposed by Coindesk on Nov. 2. "When we looked at that, there was a potential serious problem."
"Alameda had taken a huge hit" by that point. "We were seeing a run on the bank start," Bankman-Fried said.
However, on Nov. 7, a day after he claimed he knew FTX was in crisis, Bankman-Fried tweeted that "assets were fine."
"I was nervous [when] the Alameda balance sheet" was exposed by Coindesk, Bankman-Fried said, but expected the damage was going to be limited to Alameda, not an "existential" crisis for FTX.
Sorkin asked Bankman-Fried why FTX and Bankman-Fried even had access to customer money.
FTX's terms specifically said customer funds will "at all times remain with you and shall not transfer to FTX Trading."
Bankman-Fried was evasive, saying that some customers agreed to lend money, but that he wasn't aware or in control of the processes.
The company's new leadership has said in court filings he exercised significant and sometimes exclusive control over the entire empire.
"I wasn't running Alameda, I didn't know exactly what was going on, I didn't know the size of their position," Bankman-Fried said. "A lot of these are things I've learned over the last month [in the days leading up to bankruptcy.]"
Sorkin pressed Bankman-Fried on Alameda's gambling on questionable cryptocurrencies, reading a letter out loud from an investor who lost his life savings of $2 million.
"The U.S. platform is fully solvent and funded," Bankman-Fried claimed. "I believe withdrawals could be opened up today and be made whole."
No evidence has been provided to support his repeated claims that U.S. users could be made whole.
"Can I ask you about the drugs?" Sorkin said.
Bankman-Fried responded, "It's funny hearing this. I have half a glass of alcohol a year."
The FTX founder repudiated claims of wild partying and off-label drug use, saying FTX functions consisted of "board games," or "dinner parties."
Bankman-Fried claimed he was unaware of the Alameda exposure. In 2019, he said, 40% of FTX's volume was from Alameda. By 2022, Bankman-Fried claimed, that number was down to 2%, which led him to believe FTX's exposure was lessened.
Sorkin continued to press Bankman-Fried on the lending of customer assets. Bankman-Fried demurred.
"In 2018, FTX didn't have bank accounts," Bankman-Fried said as justification for why users were asked to wire funds to an account in Alameda's name instead of directly to FTX.
FTX had over 200 bank accounts across every inhabited continent by the time it filed for bankruptcy protection.
Bankman-Fried has engaged with the media only sporadically. "F--- regulators," he told a Vox reporter in a Twitter message.
Bankman-Fried engaged with regulators frequently before the bankruptcy, including SEC Chairman Gary Gensler.
"I f---ed up," he wrote in another Tweet.
FTX was once hailed as the poster child of responsible crypto. Regulators and lawmakers looked to Bankman-Fried as the future of crypto regulation, a reputation that Bankman-Fried cultivated through appearances before Congress and deepened through generous political contributions.
Bankman-Fried was already known as one of the largest donors to Democratic candidates. He claimed in a recent interview that he gave equally generously to Republican causes, through so-called dark pool contributions.
Reporters, Bankman-Fried said, "freak the f--- out if you donate to Republicans."