FTX ex-CEO Bankman-Fried claims he was unaware of improper use of customer funds -ABC News

7:16 pm Thursday, December 01st, 2022

By Hannah Lang and Susan Heavey

WASHINGTON (Reuters) -FTX founder Sam Bankman-Fried denied knowing that deposits were being used to pay its affiliated cryptocurrency trading firm Alameda Research, he told ABC News in an interview that aired on Thursday.

That interview occurred less than a day after Bankman-Fried appeared via video link at the New York Times’ DealBook Summit with Andrew Ross Sorkin, in which he said he “didn’t ever try to commit fraud,” and that he does not personally think he has any criminal liability for the firm’s collapse.

FTX filed for bankruptcy and Bankman-Fried stepped down as chief executive on Nov. 11, after traders pulled $6 billion from the platform in three days and rival exchange Binance abandoned a rescue deal.

The liquidity crunch at FTX came after Bankman-Fried secretly moved $10 billion of FTX customer funds to Alameda Research, Reuters reported, citing two people familiar with the matter.

Asked if he knew whether funds were being funneled to Alameda, FTX’s former chief executive officer told ABC: “I did not know that there is any improper use of customer funds.”

In an interview with New York magazine published on Thursday but conducted on Nov. 17, Bankman-Fried also blamed the massive losses at FTX on mislabeled internal accounts, claiming that Alameda’s effective position in a hard-to-see account “was billions of dollars bigger than it appeared to be.”

Bankman-Fried said Alameda had built up a substantial position on FTX and that as digital asset prices plummeted this year, Alameda became increasingly more leveraged to the point of no return earlier this month.

Four years after founding Alameda, Bankman-Fried stepped down as CEO of the company in October 2021, and ceded the role to Caroline Ellison and Sam Trabucco, who acted as co-CEOs until Trabucco departed the firm in August.

“These problems are problems which I believe happened over the last year or so. And I haven’t been running Alameda during that year. I was not deeply aware of what was going on,” Bankman-Fried told New York Magazine.

In a live Twitter Spaces event on Thursday, Bankman-Fried said he was “pressured very heavily” to include FTX’s U.S. subsidiary in bankruptcy proceedings, despite that, to his knowledge, FTX US was financially solvent.

He claimed he was given poor information by “people I no longer believe were acting in the interest of customers,” but declined to elaborate.

(Reporting by Susan Heavey and Hannah Lang in WashingtonEditing by Matthew Lewis)