If there are lingering doubts about Sam Bankman-Fried’s strategic thinking, assuming one could bypass filing for bankruptcy, the odd tweetsand the billions of dollars in lost client assets – those doubts surely evaporated after midnight on Wednesday, when the fallen billionaire chose to private message a Vox reporter to discuss his endangered crypto exchange FTX, providing answers. with a level of candor that would make many lawyers gag.
The 30-year-old is experiencing a virtually unprecedented meltdown. In quick succession, he had risen from MIT whiz kid to millionaire, to billionaire, to global crypto leader, only to have it all evaporate overnight. He doesn’t seem to be taking the fall for him well.
Last summer, Bankman-Fried had outlined his ethical framework to Vox reporter Kelsey Piper, telling her that unethical conduct was not acceptable, even in the service of the “greater good.”
in its conversation early Wednesday, Piper asked him if he was okay with that. “Man, all the stupid things I said,” she replied. “Not true, not really.”
Ethics, he explained, are not nearly as important to a person’s public standing as whether they are successful. The worst place to be, she said, is both “incomplete” and “losing.”
“I can see why you didn’t give that answer in the interviews,” Piper said of the new framework.
Bankman-Fried replied: “heh.”
On Wednesday, the 30-year-old tweeted that he did not intend for his comments to be made public, saying that he believed he was speaking to Piper in private as a “friend”. He added that “some of what I said was thoughtless or too strong.” (Piper disputed that she and Bankman-Fried have been friends and said he did not request that his comments be kept off the record).
Investigations into FTX are ongoing both in the US and in the Bahamas, where the company is based, although Bankman-Fried, whose parents are professors at Stanford Law School, has not been charged with any wrongdoing. He did not immediately respond to a request for comment.
This week, the former billionaire was also hit with a federal lawsuit seeking class action status in Miami District Court, alleging that FTX engaged in a “fraudulent scheme” that caused more than $11 billion in damages to the consumers. Celebrities like Tom Brady, Naomi Osaka, Gisele Bundchen and shark tank Judge Kevin O’Leary were also named as defendants. The lawsuit accused FTX of using celebrities “to raise funds and galvanize American consumers to invest…by investing billions of dollars in the [d]Responsive FTX platform to keep the whole scheme afloat.”
The chaos on FTX has moved quickly. Below are five of the biggest takeaways from this week.
1. Bankman-Fried regrets filing for bankruptcy.
“I screwed up,” he acknowledged to Vox. “Big… several times.” But perhaps “my biggest single mistake,” he declared, was filing for bankruptcy after FTX failed to secure a bailout, leaving it on the brink of collapse. Around the same time, Bankman-Fried was fired as CEO, and the new regime, he claimed, is “trying to burn it all down out of shame.” If he had waited another month, he complained, he might have been able to unfreeze the withdrawal process and get the customers back. Now Bankman-Fried is trying to raise $8 billion to save FTX. The obvious question: who would possibly hand over that money? “There’s one thing about being down,” he said. “There are people who know what that is and who want to do for someone else what nobody did for them.”
2. His philanthropic persona was at least partially false.
Bankman-Fried spoke endlessly about the philanthropic movement known as effective altruism, which defenders working to “help others” in the most efficient and productive way possible. It is similar to, but in some ways different from, classical utilitarianism. The fallen billionaire admitted to Vox that some of his public statements about ethics were little more than PR hogwash. “I feel bad for those who got screwed over,” he said, referring to “this silly game we woke up Westerners where we pull all the right tricks to get everyone to like us.”
3. Bankman-Fried admits her work with regulators was a sham.
The former FTX leader had cultivated relationships in Washington, testifying before Congress and speaking with regulators and lawmakers. Turns out it was all a sham. His real take, according to Wednesday’s interview: “Fuck the regulators.” According to Bankman-Fried, bureaucrats are inept at telling the good guys from the bad, and not just in the crypto world. The Office of Foreign Assets Control, which is responsible for enforcing the sanctions, said, “is the biggest single threat” to the United States losing its superpower status. Even the Food and Drug Administration is not helpful, she argued. After the Vox article was published, Bankman-Fried retracted some of his comments about Twitter. “It’s *really* hard to be a regulator. They have an impossible job: regulate entire industries that are growing faster than their mandate allows,” he wrote. “And very often they end up mostly being unable to police as well as they would ideally… Even so, there are regulators who have deeply impressed me with their knowledge and consideration.”
4. Seems to be playing semantic games on how FTX used client deposits.
The world took notice when, before the epic collapse, Bankman-Fried removed a tweet that insisted that client funds were “fine” and that FTX did not “invest client assets.” It later emerged that FTX had effectively bailed out Alameda Research, a trading company that Bankman-Fried was also a co-founder of, but which operated with a riskier business model. He stood by his comments to Vox, arguing they were “factually accurate” since Alameda fell under his broader corporate umbrella. But like Axios indicated, FTX’s terms of service prohibited using client money to finance trading activity. In Wednesday’s interview, Bankman-Fried said he “did not intend” to do “incomplete” things, blaming shoddy accounting in part for the disaster. “Each individual decision seemed right and I didn’t realize how big their sum was until the end,” he added.
5. FTX had an “in-house performance coach” and boy was he surprised by the company’s downfall.
in a interview with The New York Times, psychiatrist George K. Lerner said he trained FTX employees on their careers and mental health. He has trouble accepting the notion of Bankman-Fried as a “criminal mastermind,” he said. Lerner also pushed back on recent intrigue over romantic mixing among FTX employees, including executives. “They were working too hard,” he said. “Those above, for the most part, played chess and board games. There was no party. They were subsexed, if anything.”