Sam Bankman-Fried has broken his silence.
After virtual radio silence save for a series of cryptic, single-letter tweets – gradually spelling out “what happened” over the course of two days – the embattled founder behind collapsed $US32 billion ($A47 billion) cryptocurrency exchange FTX has finally resumed typing in full sentences.
As he faces criminal investigation in the Bahamas and a potential trip to the US for questioning over the disappearance of billions of dollars in customer funds, the 30-year-old has again promised to explain everything.
“I’ll get to what happened. But for now, let’s talk about where we are today,” he tweeted on Tuesday afternoon.”
On Friday, FTX filed for chapter 11 bankruptcy along with around 130 affiliated entities, including controversial trading firm Alameda Research, which is alleged to have played a central role in the implosion.
FTX is alleged to have secretly transferred up to $US10 billion ($A14.8 billion) of customer funds to Alameda to fund risky cryptocurrency trades prior to its collapse, which came after rumours of a liquidity crisis saw customers rush to pull their money out.
Fears first began to mount after CoinDesk reported Alameda was heavily invested in FTT, a token issued by FTX. According to the Financial Times, FTX had less than $US1 billion ($A1.48 billion) in liquid assets against $US9 billion ($A13.3 billion) in liabilities before it went bankrupt.
Writing on Twitter, Mr Bankman-Fried (known as SBF) said, “to the best of my knowledge, as of post-11/7, with the potential for errors”, Alameda had “more assets than liabilities” mark-to-market, “(but not liquid)”.
He added that Alameda had a margin position on FTX International and that FTX US had “enough to repay all customers”, but that “not everyone necessarily agrees with this”.
“My goal – my one goal – is to do right by customers,” he said. “I’m contributing what I can to doing so. I’m meeting in-person with regulators and working with the teams to do what we can for customers. And after that, investors. But first, customers.”
He reiterated in another tweet that his goal was “clean up and focus on transparency” and “make customers whole”.
The latest tweets come after Mr Bankman-Fried spoke to The New York Times for a lengthy piece published on Monday, which drew widespread criticism for its sympathetic tone.
“In a wide-ranging interview on Sunday that stretched past midnight, he sounded surprisingly calm,” wrote journalist David Yaffe-Bellany. “‘You would have thought that I’d be getting no sleep right now, and instead I’m getting some,’ he said. ‘It could be worse.’”
The article said Mr Bankman-Fried “voiced numerous regrets over the collapse of FTX” but “would offer only limited details about the central questions swirling around him”, including whether FTX misused billions of dollars in customer funds.
He told The New York Times that Alameda had accumulated a large “margin position” on FTX, essentially meaning it had borrowed funds from the exchange.
“It was substantially larger than I had thought it was,” he said. “And in fact the downside risk was very significant.”
Economist Alex Kruger was among many readers and industry figures to slam the article as a “puff piece”.
“Disgraceful reporting by the @nytimes on FTX,” he tweeted.
“It portrays SBF as a charitable entrepreneur who went under and does not mention the words fraud, criminal, substance abuse, friends and family Bahamas KYC racket, hack, stolen funds or wiped servers anywhere.”
He added: “The NYT author @yaffebellany wrote about SBF as if he were writing a cosy article in the lifestyle section, instead of reporting on the successor of Bernie Madoff.”
Zcash co-creator Zooko Wilcox agreed, writing: “Disgusting complicity on the part of The New York Times. He has ruined countless people’s lives by theft and fraud, and NYT is now helping him to delay or evade justice by whitewashing him in their prestigious, influential newspaper. I doubt this is just a mistake on their part.”
Jesse Powell, co-founder and former CEO of Kraken Exchange, wrote: “The MSM needs to take accountability for its role in contributing to the legitimisation and high status of this insolvent ponzi. Without the media’s backing and the endless puff pieces, victims would not have been so trusting with their savings. Even now, they downplay the story.”
Apparently in reference to media attacks on himself and Coinbase, he added: “At the same time they were pumping the FTX scam, they were writing defamatory gossip pieces about industry stalwarts, driving their audiences away from safe, reliable and proven venues. It’s too generous to call these people clowns. They betray their duty.”
Mr Bankman-Fried is facing intensifying investigations by prosecutors and regulators in both the US and the Bahamas, where the MIT graduate ran the doomed operation with a “cabal” of roommates from a luxury $US40 million ($A59 million) penthouse.
He was interviewed by Bahamas police over the weekend, and Bloomberg reported on Tuesday that US and Bahamian authorities had discussed the possibility of bringing him to America for questioning.
It came as the Supreme Court in the Bahamas named PwC provisional liquidators to oversee FTX’s assets. In Australia, KordaMentha was named voluntary administrator of the local FTX subsidiary on Friday. The securities regulator on Wednesday suspended FTX Australia’s financial services licence.
“ASIC is monitoring this situation closely and speaking regularly with international regulators and the external administrators,” the Australian Securities and Investments Commission said in a statement.
Meanwhile the contagion from FTX collapse continues, with cryptocurrency lender BlockFi preparing for a potential bankruptcy filing, The Wall Street Journal reported on Tuesday.
frank.chung@news.com.au
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