DealBook/Summit November 30th

On Wednesday afternoon Sam Bankman-Fried appeared live via video call at the New York Times DealBook/Summit. New York Time’s Andrew Sorkin did not mince words when it came to the former billionaire and his role in the fall of FTX, Alameda, and BlockFi.

It is to be noted throughout the interview the number of times Brinkman-Fried refers to the collapse as an “oversight”. As the interview began Sorkin opened the floor to Bankman-Fried with the question “what is this, and what did happen?”.

Bankman-Fried responds by taking a form of responsibility for his involvement, or lack thereof, in the downfall of FTX. Bankman-Fried gave his first of many rehearsed apologies and was quick to follow by stating the lack of intent to commit fraud.

Seemingly shifting his tone from accepting fault, to downplaying the events as a simple “oversight” he is deeply sorry about.

“At the end of the day I had a duty to everyone: the customers, the regulators, the employees, and I clearly didn’t do a good job on that. I did not intend to commit fraud on anyone. There are things I wish I had done differently.”

This tone was carried on in response to Sorkin reading a letter written by a former FTX Trading user. A letter detailing the amount lost, the effect, and a question directed to Bankman-Fried. The author of the letter asks if Sam Bankman-Fried would classify the events as fraudulent or not.

The response given was a clear deflection of the question. A rehearsed apology once again, followed by how his margin and leverage systems operate. Not once in his response does Bankman-Fried acknowledge the question let alone the user themselves.

“I am deeply sorry about what happened. Our US platform is to my knowledge fully solvent. I believe withdrawals could be opened up today for that and users could be made whole. The international platform is a margin trade platform it’s a derivative platform–“

There continues to be an obvious shift of blame throughout the entire interview that again shows the lack of accountability by Bankman-Fried. Whether it is Alameda’s leverage, the markets crashing, or the “pr assault”, it is someone else’s fault for FTX failing to cover assets owed.

The same letter from the former FTX user contained a copy pasted terms of usage from the FTX Trading website. The terms state that “None of the digital assets in your account are the property of or shall or may be loaned to FTX Trading. FTX Trading does not represent or treat digital assets in users accounts as belonging to FTX Trading”.

With that being stated, the question on the minds of millions in the crypto space, “how is it possible that Alameda had this loan of such a large size?”.

Bankman-Fried responds by referring to a completely separate section in the FTX Trading terms of use. Stating that the borrow lending facility terms of use allows the lending of billions worth of assets between each other. Again, shifting the blame to Alameda and their large position in FTX.

Did Sam Know Of Alameda’s Position?

Who was in charge of ensuring that the ability to transfer billions worth of user’s assets never over leveraged or lacked liquidity? Why were there no red flags when it was seen Alameda had the one of the lowest trading volumes on the FTX platform, yet held one the largest positions in FTX Trading?

Why weren’t the assets lent to Alameda margin called in time to cover the shorts and liabilities that flooded FTX? Using the excuse that his dashboard didn’t have the true number for the Alameda position, and he didn’t see the liquidity issue. Labeled again by Bankman-Fried as an “oversight” of FTX Trading’s risk management.

“I was deliberately trying to not be involved in what happens at Alameda.”

 “I was nervous starting November 2nd when the Alameda balance sheet was leaked on Coindesk. I was nervous that would lead to substantial losses for Alameda. I did not think it would lead to a massive loss for FTX’s customers. I was viewing it as Alameda would be tight on funds.”

Further into the interview the nervous Bankman-Fried is beginning to shake. Yet, no matter how direct the questions are from Sorkin, Bankman-Fried continues to deflect them and circle back to the lack of “oversight” as his failsafe response.

Bankman-Fried is attempting to turn this into a mismanagement case not a criminal case.

Sorkin then touches on a previously leaked conversation during which Bankman-Fried confirmed that he has donated funds to the Democratic Party but also revealed his donations to the Republican Party as well. The question now lies in was that money donated from FTX Trading user assets? This is something we will have to wait for true clarification as the legal battles are just warming up.

In this leaked conversation Bankman-Fried states these donations were to aid in a push for regulation. Yet, during this interview he tells Sorkin his main focus was always pandemic prevention, diseases, and saving people lives.

There is this odd sense of hope that Brinkman-Fried really does want to make this right for all the users who lost money in this fallout. Yet that is suffocated by immense lack of acceptance for how his actions impacted the crypto market and destroyed lives overnight.

My Take

It personally took me a while to process every aspect of this video, rewatch it, and rewatch Sam. I see a kid who truly does think he is smarter than the masses. Constantly using emotional cues throughout the conversation to draw on the listeners feelings. Manipulating the mood when in an uncomfortable moment with sarcastic, self-directed comedy.

He needs to feel in control of every situation he is in. When Sam loses control he hides from the consequences and attempts to use his do-good nature, although faked, to gain empathy from the people he stole money from.

I have believed that there is a lot deeper down the rabbit hole for this to go. The names that come up and the ties to powerful institutions will rattle the financial sector. Let me know below your thoughts on this interview and if it helped or hurt Bankman-Fried.

The views in this write-up are the views of the author only.