Sam Bankman-Fried Describes the Co-Mingling of Funds between FTX and Alameda Research
Sam Bankman-Fried’s First Live Appearance since the FTX Collapse
Sam Bankman-Fried of the now infamous FTX collapse participated last night in the NY Times DealBook Summit, in what was his first live public video appearance since the collapse. Aaron Ross Sorkin conducted the interview, which lasted well over an hour. Sorkin asked him directly about much of the operational procedures of the two companies he founded that just declared bankruptcy, FTX and Alameda Research. Bankman-Fried responded with wordy answers that at times seemed to attempt to portray himself as a victim of a disastrous occurrence as opposed to a catastrophe of his own making. Mr. Bankman-Fried ended up laying out details of how the corruption took place, at one point admitting that his appearance on the program went against his lawyer’s advice.
Co-Mingling of Funds
One topic that came up repeatedly was “co-mingling”. Bankman-Fried was asked when the “comingling of funds” began between FTX and Alameda Research. His response was that back in 2018/2019, FTX didn’t yet have bank accounts. In his own words:
“We were trying to get them, but it took a few years. There were customers who wanted to wire money to FTX, and so I think in the meantime, some of them were wiring money to Alameda Research, to get credited on FTX. And uh, I think that was a substantial sum, and I think that the FTX internal accounting did correctly effectively try to debit Alameda for those funds, but it didn’t happen in the primary account and so it didn’t happen, you know, it created a discrepancy between the display of the account and what was really going on there, and um, I’m still looking into exactly how that worked mechanically, but that did make that position size substantially larger than I thought, and I think then what you would have gotten from most normal avenues”
It appears that what Bankman-Fried was trying to say, but also not to say, is that his cryptocurrency exchange called FTX, and his hedge fund and cryptocurrency trading firm called Alameda Research had a casual “co-mingling of funds” going on for years, since before FTX opened their first bank account. Clients looking to put their money into the FTX cryptocurrency exchange would wire their money to Alameda Research bank accounts, where the money began to flow between the two companies with a lot of ease and little accounting.
“I’ve Had a Bad Month”
When Sorkin asked Bankman-Fried if he was worried about criminal liability on a personal level, his response of “I’ve had a bad month” drew laughter from the crowd. He continued to say that the time to face his personal fallout from the scandal will come, but at this point, his focus is on trying to help recover funds for his customers.