Sam Bankman-Fried Refuses To Confirm Whether He Knew Customer Funds Were Stolen

Zinger Key Points
  • Sam Bankman-Fried says that the comingling of funds began as early as July 2022.
  • The disgraced former CEO says he was surprised by the collapse of FTX.

Sam Bankman-Fried joined New York Times reporter Andrew Ross Sorkin at the DealBook Summit on Wednesday to discuss the demise of the platform.

Bankman-Fried co-founded FTX, one of the biggest cryptocurrency exchanges in the world, which failed this month.

On Nov. 11, the same day FTX filed for Chapter 11 bankruptcy protection, Bankman-Fried announced his resignation from the company. Additionally, the 30-year-old is under investigation in the U.S. and internationally for alleged securities breaches.

“I unknowingly comingled [customer] funds, and [Alameda Research] funds,” Bankman-Fried said while explaining that he didn’t know that Alameda was borrowing FTX customer funds.

Bankman-Fried said the comingling of funds began as early as July 2022, roughly the same time that Three Arrows Capital collapsed, which adversely affected the crypto industry.

The disgraced former CEO said he was surprised by the collapse of FTX, and attributed the failure to his not understanding how exposed his firm had become to troubles at Alameda Research.

“I was frankly surprised by how big Alameda’s position was, which points to another failure of oversight on my part, ” he said.

Former Alameda CEO Caroline Ellison claimed that she and Bankman-Fried were informed of the company's transfer of customer cash from FTX to Alameda to cover margin positions being recalled as a result of the liquidity issue brought on by the Luna collapse in May.

Bankman-Fried refused to confirm he knew Alameda was utilizing customer funds when it came to the $8 billion shortfall [customer funds included] that forced FTX into bankruptcy. Instead, he blamed the $8 billion gap on FTX's dashboards showing data that was inconsistent with FTX's true balance sheet.

Bankman-Fried was dealt with a hypothetical question by Sorkin, the moderator of the interview: “If I worked at a bank, and was a bank teller, and I decided to leave the bank at the end of the evening and take all the cash, that I [in a sense] had access to; even if I intended to bring it back to the bank later, even with more money to give back — I still stole the money.”

“I wasn’t running Alameda, I didn’t know exactly what was going on,” Bankman-Fried quickly said, while mentioning again he wasn’t aware of the size of Alameda’s position. 

It should be noted that Bankman-Fried lived in the same home as two high-level Alameda Research employees in the Bahamas. 

Additionally, Alameda had more than $5.82 billion worth of FTT tokens (FTX's native crypto token) which was 40% of its total assets. The $5.82 billion included $3.66 billion that was “locked,” or completely illiquid.

See Also: Wastin' Away In FTX Debt: FTX Creditors Include Amazon, Lawyers And This Music-Themed Hospitality And Resort Company

This story is developing. Please check back in for updates.

Photo: FTX YouTube screenshot

Market News and Data brought to you by Benzinga APIs
Posted In: CryptocurrencyMovers & ShakersExclusivesHotAfter-Hours CenterMarketsMediaGeneralAndrew Ross SorkinCaroline EllisonDealBook SummitNew York TimesSam Bankman-Fried
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!