Former FTX CEO Sam Bankman-Fried claims he was unaware that there was a commingling of funds between FTX and Alameda Research.
In an interview with Andrew Ross Sorkin at the DealBook Summit on Wednesday, Bankman-Fried said he “didn’t knowingly commingle funds” when asked whether FTX user funds were sent to the trading firm Alameda from the exchange.
Bankman-Fried went on to claim he was surprised by how big Alameda’s position was, calling it a “failure of oversight” on his part.
Sorkin then asked Bankman-Fried about Alameda CEO Caroline Ellison’s remarks in a company meeting reported by The Wall Street Journal, where Ellison told staffers that Alameda used FTX client funds to cover loans that were being recalled because of the LUNA-triggered credit crunch. Ellison reportedly disclosed that besides herself, Bankman-Fried, former FTX CTO Gary Wang , and former director of engineering Nishad Singh were aware of the use of customer funds in this manner.
“What it seems like happened, in the middle of the year…most of the borrow/lending desks in the space blew out or closed down. It seems like Alameda had margin positions opened with them, and they moved a bunch of that over to FTX this year when they shut down,” said Bankman-Fried.
The former FTX CEO claims to be recounting these events by piecing together information over the last month, given his “limited access to data.”
When asked how he reconciled these events with his statements made on Twitter last month referring to the scenario as an $8 billion accounting mistake, Bankman-Fried said he thinks there was a “substantial discrepancy” between what the true financials were and what the dashboards they had displayed for Alameda’s account.
“That’s one of the reasons that I was surprised, when we dug into everything, at how big that [Alameda’s] position had become,” he said.
Bankman-Fried’s comments sparked an outcry from several members of the crypto community, most of whom perceived his statements as a strategy of feigning ignorance.
The SBF legal strategy is to attempt to characterize fraud as incompetence, in order to stay out of jail.
— Vinny Lingham (@VinnyLingham) November 30, 2022
Sam claims he was not involved in ALAMEDA Research and was "unaware" of the co-mingling of funds.
In actual fact, for years you had to WIRE ALAMEDA Research money to even get money on FTX. Funds were ALWAYS co-mingled. https://t.co/pjgLV0Cc6Q
— Coffeezilla (@coffeebreak_YT) November 30, 2022
I watched that SBF @andrewrsorkin interview, and I have to say that I still can't believe what I just witnessed. I'm actually speechless at the level of reality distortion field at play here. Also… audience applauding at the end? WTF!
— David Marcus (@davidmarcus) November 30, 2022