Sam Bankman-Fried tweeted me last night. I was surprised. I’d talked to Bankman-Fried through Zoom earlier this summer for a profile, so I DM’d him on November 13 when news surfaced that his crypto exchange had crashed, with billions in client money presumably gone. I didn’t anticipate him to answer; persons under SEC and DOJ investigation don’t usually remark.
On Regulators
Bankman-Fried wanted to speak. FTX and his hedge firm Alameda Research allegedly gambled with client money. We tweeted for more than an hour after midnight Bahamas time, where Bankman-Fried is still situated. He was still trying to repay his depositors, he added.
Before his enterprise crumbled, Bankman-Fried lobbied for cryptocurrency regulation. Bankman-Fried has avoided criticizing authorities, unlike Binance CEO Changpeng “CZ” Zhao. But he downplayed their role. He recalled his earlier conciliatory words, including when he stated cryptocurrency regulation would be “wonderful.” He verified detractors’ claims that his advances to Washington were more about appearance than substance.
On Behaving Unethically
I’ve heard debate about whether Bankman-Fried thinks it’s appropriate to conduct immoral actions “for the greater good” — a viewpoint extreme of utilitarians, whom Bankman-Fried has been described as, would believe. For example, in a prior interview with Bankman-Fried, I compared founding a crypto firm to a cigarette company: as highly unethical. Presumably, there’s some line where you shouldn’t do anything so horrible for good reasons.
He said, “There’s a line.” “There must be a line. You might cause more harm than good. OK, OK, but I deduct that. It takes a lot of effort because collaborating with partners and in humanitarian endeavours can be dangerous if your primary business is harmful to the world.
On Truth-bending
Bankman-Fried said FTX has never invested customers’ crypto money. At the same time, he insisted that FTX didn’t directly utilize account money in this manner. He stated that Alameda, which he also controls, had borrowed significantly more money from FTX’s accounting records for acquisitions than he expected—leaving FTX exposed to the cryptocurrency version of a banking collapse.
On What Happened
According to one view, the collapse of Terra’s LUNA stablecoin may have seeded the seeds of FTX’s demise. However, bankman-Fried stated “messy bookkeeping” prevented him from realizing the problem’s scope.
Regrets
Bankman-Fried said he “fluffed.” Big Time .” He said most of the issues that bedevilled FTX might have been averted if FTX hadn’t filed bankruptcy, which took financial affairs out of his hands. Instead, bankman-Fried was substituted as FTX CEO by John J. Ray III, an attorney who helped Enron creditors collect billions. “The company’s leaders are attempting to destroy it out of embarrassment,” he said.
FTX Hack
Shortly after FTX declared bankruptcy, blockchain transaction observers noted hundreds of millions being moved out. Bankman-Fried explained.
On What’s Next
Bankman-Fried intends to raise about $8 billion to reimburse account holders. “That’s it,” he informed me. “A month ago, I was among the world’s finest fundraisers,” he claimed. But $8 billion exceeds what FTX has raised so far, and there need to be more signs investors would bite. Moreover, debtors and the bankruptcy court would likely have to agree even if he did obtain cash.
