FTX's crypto villain Sam Bankman-Fried admits 'I made a lot of mistakes'
- Reference: 1669874294
- News link: https://www.theregister.co.uk/2022/12/01/sbf_ftx_admits_mistakes/
- Source link:
Speaking at the New York Times' DealBook Summit, SBF said he believes FTX's US operations were solvent and investors could be made whole. But the company's overseas operations, he opined, dragged the company down.
SBF took responsibility for the collapse, admitting that those overseas outposts took risky positions that crashed FTX.
[1]
He admitted to "massive failure of oversight of risk management and of … responsibility from myself running FTX."
I've had a bad month. This has not been fun for me
But he denied driving, or knowing of, a strategy to comingle funds between FTX and Alameda Research – a company also largely owned by SBF that was FTX's biggest user and a huge holder of FTX's FTT token.
The obvious conflict of interest and potential for mutually beneficial collusion between FTX and Alameda worried observers – correctly, as it turned out. FTX loaned billions of customers' funds to Alameda. Once that transaction became known, it was apparent that FTX customers' assets were beyond their reach, and FTX's. FTX collapsed because it was then not in a position to return customers' funds.
[2]
[3]
SBF said that set of circumstances "points to another failure of oversight on my part … failure to appoint someone to be chiefly in charge of that … but I wasn't trying to co-mingle funds."
It just happened on his watch anyway.
[4]FTX disarray declared 'unprecedented' by exec who cleaned up after Enron
[5]Block Fi seeks bankruptcy protection as 'shocking' FTX contagion spreads
[6]Too soon? Amazon commissions FTX mini-series
[7]FTX collapse prompts other cryptocurrency firms to suspend withdrawals
[8]Another crypto shocker: Major player actually corrects $400m mistake instead of cratering
SBF said he sensed that FTX was in trouble and its Alameda entanglements were to blame, and tried to recover FTX's liquidity.
During the hour-plus interview, SBF defended his extensive political donations as support for candidates he felt supported policies that could head off future pandemics – not attempts to create an easier regulatory environment for FTX.
[9]
He tried to explain real estate investments in the Bahamas as a recruiting tool to lure talent from Silicon Valley.
[10]YouTube Video
Asked if investors in FTX bear responsibility for the company's collapse, SBF disagreed that they should have conducted greater oversight. The nature of venture capital, he said, is to look for a big exit and not to ponder all the ways an investment could fail.
[11]
SBF appeared contrite during the interview, saying "Look, I've had a bad month. This has not been fun for me but that's not what matters here."
"What matters here is the millions of customers. What matters here is all the stakeholders in FTX who got hurt, and trying to do everything I can to help them out."
But during the interview it was apparent that SBF did too little to help them out by doing his job as CEO, and now has little power to do anything that will help.
While he has made efforts to understand the cause of FTX's collapse, he said "Over the last month I have limited access to data." His analysis is therefore a mixture of memory and informed guesswork.
But the verdict on what he left behind is already damning: John Ray III, the newly-appointed CEO of FTX who gets to clean up the mess, has rated the company's affairs as worse than anything he has previously seen.
And Ray was the man who oversaw the dissolution of Enron – the energy trading firm that has for 20 years been the benchmark for corporate malfeasance and recklessness. ®
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[4] https://www.theregister.com/2022/11/18/ftx_disarray_declared_unprecedented_by/
[5] https://www.theregister.com/2022/11/28/block_fi_seeks_bankruptcy_protection/
[6] https://www.theregister.com/2022/11/24/amazon_ftx_mini_series/
[7] https://www.theregister.com/2022/11/15/ftx_collapse_cryptocurrency/
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[12] https://whitepapers.theregister.com/
Re: Fortunately he took out some insurance
Quite the bet hedger. Looking at how a lot of the media has been portraying him, we're probably about to see how much a get out of jail free card costs: $235m to Republican candidates, $755m to Democrat candidates and $38.8m to interest groups. That's probably enough to buy both freedom and going back into the industry after some time in the quiet corner.
Re: Fortunately he took out some insurance
It really depends on how powerful the people who have lost money are. I'm concerned that he and those involved and those who were aware of all of this will walk away with little or no ramifications. I'm also cocnerned that, Sam Bankman Fried at least, will get Epstein'd. Neither is palatable.
Re: Fortunately he took out some insurance
I think the people who lost are the ones who aren't supposed to be winning in the first place, like the Gamestop crowd, except they were also causing people who are supposed to win to (temporarily) lose.
Re: Fortunately he took out some insurance
I think you'd overstated the Republican and Democrat donations somewhat, it's $235,000 and $990,000, not million
Re: Fortunately he took out some insurance
Bugger, you're absolutely right. I read the 'nearly a billion' part (which refers to all donations, not just his) and got my units mixed up. I wonder if this means the get out of jail cards are 1000x cheaper or if he hasn't paid a sufficient amount.
Re: Fortunately he took out some insurance
Not just Republicans, but the Democrats as well.
The take from this is not to go tribal, but to look at the fact that he was buying your politicians. *That* is the issue here.
Perhaps follow the money and hold all of them to account, ask uncomfortable questions and drive the obviously corrupt officials - no matter the party - out of office.
Re: Fortunately he took out some insurance
Ironic that the link that the Guardian created gives the impression that it was the Republicans that recieved the money when what actually happened was the opposite.
Here s the text fom the article
Quote :
But Bankman-Fried’s public donations went largely to Democrats. The FTX founder gave more than $990,000 to candidates in the last election cycle, according to OpenSecrets, and another $38.8m to outside groups. Only about $235,000 of his public political giving went toward Republican candidates.
Re: Fortunately he took out some insurance
Most people don't read past the headlines. He could have only given $1 to the GOP but they'd still spin it as a huge donation.
The likely truth is FTX was a huge money laundering operation and the extent of his democrat donations had already come out before the midterms. This is just a desperate attempts to shift some focus away from 'the good party'.
Re: Fortunately he took out some insurance
Most people don't read past the headlines.
The sub heading on the linked article: "The crypto entrepreneur was thought to be a big donor to Democrats but now acknowledges he gave equally to GOP"
Re: Fortunately he took out some insurance
Bankman-Fried’s public donations went largely to Democrats. (bold emphasis mine - T.F.M.R.)
My parsing of the Grauniad's piece is: he "donated about the same amount to both parties,"[*] but took care to hide donations to GOP "because reporters freak the fuck out if you donate to Republicans"[*]. The quoted sentence is certainly in the article, but refers to the public part of the donations only.
[*] This is a direct quote - don't kill the messenger.
Re: Fortunately he took out some insurance
I thought for a minute the ever-disreputable AIG was going to come in to the picture, but you weren't talking about literal insurance
You bought nothing but a number,
and you trusted someone else would always be willing to buy it from you because a computer says you own it and blockchain.
A hand in the till always causes problems
The expression "A hand in the till" (US -- "cash register") seems to cover FTX. Sure, the product/promise was abstract and it was hyper trendy computer based stuff but ultimately the issue is that instead of taking a relatively modest (eerrmm) agreed salary the principals just took the cashflow and treated it as their pocket money.
The difference between these amateurs and pros is that the pros know when to stop for the most part, balancing maximum compensation against the need to keep the party going.
A good, if somewhat old, read is the book "The Best Way To Rob a Bank Is To Own One".
Re: A hand in the till always causes problems
A hand? Pretty sure he had his arm in all the way up to the shoulder!
FTX + SBF is Facebook + Zuckerbot all over again, only this time it wasn't personal info the "dumb fucks" were trusting a douchebag with but billions of dollars.
Yeah, the mistake was getting caught
The fraud was intentional.
Another difference between these amateurs and pros
The pros tend to cover their tracks better. Quite apart from any actual fraud, the investigation showed that FTX was run like a kiddies piggy bank, with absolutely no corporate governance or financial management. A competent fraudster doesn't display their activities so blatantly.
Re: Another difference between these amateurs and pros
Agreed.
When I saw the interview, the only thing I could think of is : this is a kid. He's got zero banking experience, zero CEO experience and the only reason he got the job is because venture capitalists are stupid and willing to give hundreds of millions to someone that just spouts the right bullshit.
If there is one thing that this crypto madness is demonstrating repeatedly, it's that you don't hand the responsability of money to someone who doesn't have more than a decade of experience handling money in a regulated environment.
There's a reason why the bank teller doesn't become head of branch in six months.
Re: Another difference between these amateurs and pros
venture capitalists are stupid and willing to give hundreds of millions to someone that just spouts the right bullshit
Seeing as it's increasingly other people's money they hand over, I'd say it's not them that are stupid.
His biggest mistake seems to have chosen to run in a country which has signed [1]an extradition treaty with the US.
== Bring us Dabbsy back ==
[1] https://www.congress.gov/treaty-document/102nd-congress/17/resolution-text
Translated: I sometimes feel a bit sorry for the poor souls who lost everything by trusting me. But then I take a nice walk on the beach that I purchased with the funds I funneled away and have a drink.
It works on so many levels!
A guy fiddling with and losing cash? And his name is Bankman?
"I didn't try to commit fraud" - SBF
"Do or do not. There is no try" - Yoda
As far as I understand, he had a backdoor
That he put in, to allow him to pull money out without it appearing as transactions.
Lock him up like Madoff; clear case of a Ponzi scheme.
"he believes FTX's US operations were solvent and investors could be made whole"
Looks to me a scheme to get out from US investigations and trials, knowing that with those "offshore" he may be luckier...
"But the company's overseas operations, he opined, dragged the company down."
... does this translate to "The Bankman will try to recoup the money of the rich American, so that he can get away with a slap on the wrist"?
Fortunately he took out some insurance
[1]FTX billionaire Sam Bankman-Fried funneled dark money to Republicans.
[1] https://www.theguardian.com/technology/2022/nov/30/ftx-billionaire-sam-bankman-fried-dark-money-republicans