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Bankrupt crypto firm's founder says he 'didn't ever try to commit fraud'

FTX’s newly installed CEO has lambasted his predecessors in a filing in bankruptcy court.

FORMER FTX CHIEF Executive Sam Bankman-Fried has apologised for a “lot of mistakes” in the abrupt collapse of the cryptocurrency firm and said he did not knowingly behave fraudulently.

“I didn’t ever try to commit fraud on anyone,” Bankman-Fried told the Dealbook conference hosted by CNBC and The New York Times.

“I’m deeply sorry about what happened,” Bankman-Fried said. “Clearly I made a lot of mistakes or things I would be able to give anything to be able to do over again.”

Bankman-Fried, appearing by video from the Bahamas, said he was “shocked” by many of the details that have surfaced amid the cryptocurrency platform’s collapse, depicting the problems as stemming from lax oversight and corporate controls rather than an intent to defraud.

On 11 November, Bankman-Fried resigned as FTX filed for bankruptcy protection while facing a large financing shortfall and a deluge of withdrawals from panicked customers. The firm at its peak had been worth some $32 billion.

At the time, FTX had taken some $10 billion in customer funds without authorization, according to the Wall Street Journal.

Much attention has focused on the relationship between FTX and Alameda Research, an affiliated trading firm.

Bankman-Fried acknowledged an “embarrassing” lack of attention to conflicts of interest between the two firms, but insisted that he was not abreast of the details on Alameda and did not run Alameda.

Among the revelations, the digital currency news site CoinDesk reported on 2 November that Alameda’s balance sheet was heavily built on FTT — a token created by FTX and not based on an asset with independent value.

The value of FTT plunged in early November as both Alameda and FTX cratered and has not recovered.

Bankman-Fried said that he was also surprised at the scale of Alameda’s positions on FTX that were troubled and which ultimately stressed the firm.

“I didn’t think it was existential for FTX,” Bankman-Fried said of Alameda’s financial stress, adding that he thought the problem would “end up having some small impact on FTX, but not a significant one, not one that hurt customers at all.”

Bankman-Fried said he didn’t knowingly “comingle” funds between the two firms.

FTX’s newly installed CEO John J. Ray has lambasted his predecessors in a 17 November filing in bankruptcy court.

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” Ray said in the filing.

“From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented,” he said.

Bankman-Fried said yesterday he was not aware that he was the subject of a criminal probe, adding that he rejected his lawyer’s advice to stay silent now.

“I have a duty to explain what happened,” he said. “And I think I have a duty … if there is anything I can do to try and help customers out here.”

Bankman-Fried suggested US investors in FTX could recover their losses, but did not explain how this might happen.

© AFP 2022

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    Mute Pat O'Brien
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    Dec 1st 2022, 9:54 AM

    There’s is nothing fradulant about a three dimensional trianglur investment opportunity.

    117
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    Mute Christopher Byrne
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    Dec 1st 2022, 1:06 PM

    @Pat O’Brien: Its Crypto Bro…you don’t understand blockchain. Its all legit…

    19
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    Mute zephyrum
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    Dec 1st 2022, 1:33 PM

    @Christopher Byrne:

    Ledgers are simple. Financial concepts are not.

    9
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    Mute Tricia G ☘️
    Favourite Tricia G ☘️
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    Dec 1st 2022, 10:01 AM

    This lad’s so fecked.

    I’m going to take customer funds from my first company, lend it to my second (the CEO is my girlfriend but hey, I’M not running it) and then “borrow” a Billion of it…..

    Will he do a John McAfee I wonder? Might be hard to hide all that hair……

    99
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    Mute David Mc Cabe
    Favourite David Mc Cabe
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    Dec 1st 2022, 1:38 PM

    @Tricia G ☘️: And the girlfriend openly admitting she doesn’t like or use maths and is only educated to a about equivalent Junior Cert level and then openly admits to a love of ampthemine use on social media.

    25
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    Mute Genera L Consensus
    Favourite Genera L Consensus
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    Dec 1st 2022, 10:45 AM

    Never trust crypto

    68
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    Mute Julie Keating
    Favourite Julie Keating
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    Dec 1st 2022, 11:03 AM

    Bankman-Fried as surname!!

    57
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    Mute Paul Furey
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    Dec 1st 2022, 11:33 AM

    @Julie Keating: has to be made up :) He should have gone with Bankman-TriednTested

    22
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    Mute Sean
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    Dec 1st 2022, 10:03 AM

    Lax oversight and lack of controls where billions of dollars are involved invites fraud. Same thing really.

    48
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    Mute Derek Lyster
    Favourite Derek Lyster
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    Dec 1st 2022, 10:40 AM

    Some ponzi schemes are so big people refuse to accept that they are just that. A lot of people have egg on their face over this.
    He could do a Ruja Ignatova and vanish.

    46
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    Mute David Mc Cabe
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    Dec 1st 2022, 1:45 PM

    @Derek Lyster: Yea, like Shark Tank Kevin O’Leary who lost his investors money big time in this, openly admitting he would hire him back in a heartbeat to work for him claiming he is one of the 0.01% brilliant genius people. Guy can’t admit he got scammed so had to make him out to be some superhuman rainman brainman so his ego doesn’t get hurt.

    17
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    Mute Pavel Shipilov
    Favourite Pavel Shipilov
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    Dec 1st 2022, 12:57 PM

    Best joke ever! Stealing customers money to gamble on markets is not a fraud. Of course it’s not. Jail time.

    33
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    Mute michael walsh
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    Dec 1st 2022, 1:27 PM

    Just like Sean Quinn, it’s all the people up in Dublin’s fault he done nothing wrong

    26
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    Mute Muckser Maher
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    Dec 1st 2022, 11:51 AM

    Gambling for geeks. How many got sucked in not knowing its run by kids. Quick buck then turns to quick sand. Next.

    31
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    Mute Dave Hammond
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    Dec 1st 2022, 4:59 PM

    Darling of the financial media coverage who basically scammed billions with crypto waffle moves to Bahamas and and basically makes lawyer written statements about not knowingly committing any fraud so as not to incriminate himself and people are surprised / surely NO one expected him to kick back and say yeah I swindled billions but hey….

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    Mute Liz O'Neill
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    Dec 2nd 2022, 11:22 AM

    ‘….. appearing by video from the Bahamas “

    2
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