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Embattled ex-FTX CEO Sam Bankman-Fried reflects on his ‘costly’ apathy for risk management during his time with the exchange.
Sam Bankman-Fried recently stated that he did not devote time to risk management practices while helming fallen crypto exchange FTX. In a recent interview filmed in the Bahamas, where Bankman-Fried remains holed up, the disgraced former CEO reflects on what could have been.
According to Sam Bankman-Fried, if he had devoted an hour a day to risk management, FTX might still be functional today. Instead, on claims that he was an expert on risk management, Bankman-Fried said, “I wasn’t even trying, like, I wasn’t spending any time or effort trying to manage risk on FTX”. Furthermore, the embattled ex-CEO also addressed accusations of financial impropriety, maintaining that he did not misuse customers’ funds:
“I did not know there was any improper use of customer funds.”
When quizzed about what really led to FTX’s collapse, Bankman-Fried retorted, “I don’t know what to say, like, what happened, happened”. At a New York Times conference interview, he also commented on the lack of risk management.
Sam Bankman-Fried Position on Risk Management, Other Public Admittances Could Incriminate Him, Legal Experts Say
Bankman-Fried’s disclaimer on risk management and alleged misuse of funds contradicts the position taken by his successor at FTX. New CEO John Ray III previously criticized his predecessor’s leadership as a “complete failure of corporate controls”. Furthermore, Bankman-Fried’s latest sit-down for an interview extends a recurring pattern of post-bankrupt ramblings on social media and media interviews. Although he remains largely away from the public in the Bahamas, the former FTX chief executive has resorted to repeatedly apologizing for what happened. However, legal experts opine that Bankman-Fried’s suggested public show of guilt would make it easier for prosecutors to file criminal charges against him. According to BakerHostetler partner Teresa Goody Guillén, earlier last month:
“[Prosecutors building a case against Bankman-Fried] is on the table. It’s possible. In his series of tweets, he makes numerous admissions which could be used against him.”
Alleged Inconsistencies in Reasons Given for FTX Bankruptcy
Despite the threat of public admittance, some also point to inconsistencies in Bankman-Fried’s numerous explanations. For instance, he reportedly told a journalist on Wednesday that he first discovered there was a problem at FTX on November 6th. However, in a series of now-deleted tweets from November 7th, Bankman-Fried claimed that the exchange and its assets were fine.
In his most detailed account of what led to FTX’s demise, Bankman-Fried mentioned two factors in a session with the New York Magazine. The former FTX CEO first explained that the margin position of sister firm Alameda Research grew too big and got liquidated, resulting in a considerable deficit in the exchange’s balance sheet.
Bankman-Fried’s second reason for FTX’s collapse was a stub account left over from when the exchange could not secure bank accounts. He also claimed that this stub account amounted to a massive ‘obscure’ debt position. According to the former crypto wunderkind, the actual position turned out to be much bigger than it appeared.