FTX Founder Says He Failed to See Warnings Signs Leading to Firm’s Collapse
FTX founder and former Chief Executive Sam Bankman-Fried said he expanded his business too fast and failed to notice signs of trouble at the exchange, whose downfall sent shock waves through the crypto industry, the New York Times reported late on Monday. “Had I been a bit more focused on what I was doing, I would have been able to be more thorough,” Bankman-Fried said in an interview with the newspaper. FTX filed for bankruptcy on Friday, one of the highest-profile crypto blowups, after traders hastened to withdraw $6 billion (roughly Rs. 488 crore) from the platform in just 72 hours and rival exchange Binance abandoned a proposed rescue deal.
The US Justice Department, the Securities and Exchange Commission and the Commodity Futures Trading Commission are now all investigating how FTX handled customer funds, a source told Reuters.
Bankman-Fried, who is based in the Bahamas, declined to comment on his current location, citing safety concerns, the newspaper said.
When asked whether FTX used customer funds to prop up the trading firm Alameda Research that he founded, Bankman-Fried told the New York Times that Alameda had accumulated a large “margin position” on FTX.
“It was substantially larger than I had thought it was,” he said and added without providing details that the size of the position was in the billions.
Reuters reported last week that Bankman-Fried had secretly transferred $10 billion (roughly Rs. 81,360 crore) of customer funds from FTX to Alameda.
A large portion of that total has since disappeared, according to a Reuters report. One source put the missing amount at about $1.7 billion (nearly Rs. 13,700 crore). The other said the gap was between $1 billion and $2 billion (nearly Rs. 16,100 crore).
The financial hole was revealed in records that Bankman-Fried shared with other senior executives last Sunday, according to the two sources. The records provided an up-to-date account of the situation at the time, they said. Both sources held senior FTX positions until this week and said they were briefed on the company’s finances by top staff.