The founder of FTX Sam Bankman-Fried (SBF) says his company had no preparations or precautions for risk management.
Key Details
- SBF has appeared in public to explain his actions surrounding the fall of FTX.
- He appeared last Wednesday at the New York Times Dealbook summit, has spoken on several smaller podcasts, and spoke with George Stephanopoulos on ABC’s Good Morning America on Thursday.
- SBF told Stephanopoulos that risk management wasn’t something he considered with FTX and Alameda prior to their respective bankruptcies.
- “I wasn’t even trying, like, I wasn’t spending any time or effort trying to manage risk on FTX,” he says.
Why it’s News
FTX was at the forefront of the largest bankruptcy in the history of crypto, following its announcement on November 8 that it was facing a liquidation crisis. This quickly resulted in the bankruptcy of the company and SBF’s resignation. The company is currently in the process of bankruptcy and being disassembled by liquidation lawyer John J. Ray III, who has called the company one of the worst-managed financial institutions he’s ever worked on.
SBF has been advised against speaking to the public about the collapse of his company but has made several public appearances to try and explain himself and the billions of dollars worth of user funds he allegedly squandered or lost. He previously admitted at Wednesday’s summit that he “screwed up” and “didn’t ever try to commit fraud.”
“The FTX founder has seemed to lean into criticism about his loose approach to risk and compliance concerns. Some early employees at Alameda Research, a cryptocurrency hedge fund affiliated with FTX, said they left Alameda in 2018 before FTX was founded, citing concerns about his cavalier attitude. Both Alameda and FTX are now bankrupt,” says The Wall Street Journal.
SBF continues to face investigation from multiple government agencies—including the Security and Exchange Commission and the FBI—and is expected to appear before the House Financial Services Committee next week.
Notable Quote
“I don’t know what to say. What happened, happened—and, if I had been spending an hour a day thinking about risk management on FTX, I don’t think that would have happened,” says Bankman-Fried.