The former CEO of failing cryptocurrency exchange FTX said Wednesday that he did not “knowingly” misuse clients’ funds and believes his millions of angry clients will eventually recover.
Sam Bankman-Fried’s comments came during an interview with Andrew Ross Sorkin at a conference hosted by The New York Times. Bankman-Fried has done a handful of media interviews since FTX collapsed in mid-November, but Wednesday’s was his first video interview since filing for bankruptcy protection on Nov.
“I never wanted to scam anyone. “I was shocked by what happened this month,” said Bankman-Fried.
FTX failed in the cryptocurrency version of a bank run when customers tried to withdraw their holdings all at once amid growing doubts about the financial strength of the company and its affiliated trading arm, Alameda Research. The new management of FTX has described the management of the cryptocurrency exchange since its collapse as a “complete failure of corporate controls”.
Bankman-Fried said he took responsibility for FTX’s collapse and failed to grasp the amount of risk FTX and Alameda were taking on both companies. One of the charges leveled against Bankman-Fried is that Alameda allows customers to use their FTX assets to bet on the market. Bankman-Fried told Sorkin that customers did not “knowingly” mix their assets with Alameda.
Exchanges like FTX need customers to separate their deposits from the bets they place on the markets. Other financial companies, including MF Global about 10 years ago, got into legal hot water for misusing customers’ deposits.
“Whatever happened, why it happened, I had a duty to our stakeholders, our customers, our investors, to our regulators around the world, to do the right thing,” said Bankman Fried.
Sorkin challenged Bankman-Fried on how and when investors would get their money back, Bankman-Fried said largely because he believed FTX’s US branch was fully solvency and could initiate withdrawals immediately. As for the rest of FTX, which is significantly larger than its US division, the fate of clients’ funds is largely beyond his control at this point, he said.
Bankman-Fried, once one of the richest people in the world on paper, now says he probably has less than $100,000 left to his name after FTX’s failure. He makes a living on a credit card while he’s still in the Bahamas.