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FTX’s Bankman-Fried apologises, denies trying to commit fraud

The founder of FTX tells the conference that he has made “a lot of mistakes” and is “shocked” by new details about the stock market’s collapse.

Former FTX chief executive Sam Bankman-Fried has apologized for “many mistakes” made in the cryptocurrency company’s abrupt collapse, saying he was not knowingly acting fraudulently.

“I’ve never tried to cheat with anyone,” Bankman-Fried said Wednesday at the DealBook Summit hosted by CNBC and The New York Times.

“I’m very sorry about what happened,” said Bankman-Fried. “Obviously I’ve made a lot of mistakes or things I could give anything to do again.”

Bankman-Fried – who appeared via video from the Bahamas donning his signature attire from a simple T-shirt – said he was “appalled” by many of the details that came to light during the collapse of FTX, which he said was the portrayed problems as being the result of lax oversight and business controls rather than an intent to defraud.

He resigned from FTX on November 11, when the cryptocurrency platform filed for bankruptcy protection while facing a major funding shortfall and a deluge of withdrawals from panicked customers. The company was worth about $32 billion at its peak.

At the time, according to the Wall Street Journal, FTX had taken some $10 billion in customer assets without authorization.

Much attention has been paid to the relationship between FTX and Alameda Research, an affiliate trading firm.

Bankman-Fried acknowledged an “embarrassing” lack of attention to conflicts of interest between the two firms, but insisted he was unaware of the details about Alameda and did not direct Alameda.

No ‘existential’ risk

Among the revelations, digital currency news site CoinDesk reported on Nov. 2 that Alameda’s balance sheet was heavily built on FTT — a token created by FTX and not based on an asset of independent value.

FTT’s value plummeted in early November when both Alameda and FTX collapsed and has not recovered.

Bankman-Fried said he was also surprised at the scale of Alameda’s holdings on FTX, which created problems and ultimately put pressure on the company.

“I didn’t think it was existential for FTX,” Bankman-Fried said of Alameda’s financial stress, adding that he thought the issue would “ultimately have a small impact on FTX, but not a significant one, not one that hurt customers did to all”.

Bankman-Fried said he was not knowingly “mixing” money between the two firms.

FTX’s newly installed CEO John Ray has criticized his predecessors in a Nov. 17 bankruptcy filing.

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of reliable financial information as here,” Ray said in the filing.

“From compromised system integrity and deficient regulatory oversight abroad to the concentration of control in the hands of a very small group of inexperienced, inexperienced and potentially compromised individuals, this situation is unprecedented,” he said.

Bankman-Fried said on Wednesday he was unaware he was the subject of a criminal investigation, adding that he had rejected his lawyer’s advice to keep quiet now.

“I have a duty to explain what happened,” he said. “And I think I have a duty… if there’s anything I can do to help customers here.”

Bankman-Fried suggested that FTX’s US investors could recoup their losses, but did not explain how this could happen.

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Merry

Merry C. Vega is a highly respected and accomplished news author. She began her career as a journalist, covering local news for a small-town newspaper. She quickly gained a reputation for her thorough reporting and ability to uncover the truth.

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