Sam Bankman-Fried, the former CEO of cryptocurrency giant FTX, defended his actions on Wednesday in his first public appearance since his exchange collapsed earlier this month.
“Clearly, I made a lot of mistakes. There are things I would give anything to be able to do over again. I didn’t ever try to commit fraud on anyone,” said Bankman-Fried.
The 30-year-old was speaking at the New York Times’ DealBook Summit via video link from the Bahamas in his first public speech after the collapse of FTX and its sister trading firm Alameda Research.
On Nov. 11, FTX filed for bankruptcy protection in the US, and Bankman-Fried also stepped down as CEO.
“I was excited about the prospects of FTX a month ago. I saw it as a thriving, growing business. I was shocked by what happened this month. And you know, reconstructing it…there are things that I wish I had done differently,” he said.
The former crypto billionaire also distanced himself from Alameda, which he said became larger over the course of 2022.
“I wasn’t running Alameda. I didn’t know exactly what was going on. I didn’t know the size of their position,” said Bankman-Fried, adding “that’s a pretty big oversight that I wasn’t more aware.”
He also said that FTX could have margin call positions and could have “closed them down in time such that it would cover all of those, all those shorts, all those liabilities,” but it did not do so.
“And that’s a massive failure of oversight of risk management,” he added.
FTX, which was the world’s second-largest cryptocurrency exchange by daily trading volume, filed for bankruptcy earlier this month due to liquidity problems.
While Bankman-Fried later apologized to investors in a series of tweets, cryptocurrencies went into freefall due to the financial turmoil and perceived risks of investors.
The exchange once boasted a $32 billion valuation.
Bankman-Fried, a Democrat donor, told ABC News this week that he currently has just one ATM card and $100,000 in his bank account. He once had an estimated fortune of more than $20 billion.
CRYPTOCURRENCY SCAM: FTX’s Sam Bankman-Fried arrested in the Bahamas
“S.B.F.’s arrest followed receipt of formal notification from the United States that it has filed criminal charges against S.B.F. and is likely to request his extradition,” the government of the Bahamas said in a statement.
The arrest was the latest stunning development in one of the most dramatic falls from grace in recent corporate history. Mr. Bankman-Fried, 30, was scheduled to testify in Congress on Tuesday about the collapse of FTX, which was one of the most powerful firms in the emerging crypto industry until it imploded virtually overnight last month after a run on deposits exposed an $8 billion hole in its accounts.
Prosecutors for the Southern District of New York confirmed that Mr. Bankman-Fried had been charged and said an indictment would be unsealed on Tuesday. Separately, the Securities and Exchange Commission said in a statement that it had authorized charges “relating to Mr. Bankman-Fried’s violations of our securities laws.”
The criminal charges against Mr. Bankman-Fried included wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy and money laundering, said a person with knowledge of the matter.
Mr. Bankman-Fried, who was the only person charged in the indictment, was taken into custody by the Bahamian authorities, the person said. He was arrested shortly after 6 p.m. at his apartment complex in the Albany resort in the Bahamas, according to a statement from the Bahamian police. The timing of when Mr. Bankman-Fried might be moved to the United States was unclear. While the Bahamas has an extradition treaty with the United States, the process can take weeks, and sometimes far longer if a criminal defendant contests it.
Mr. Bankman-Fried was cooperative during the arrest, according to a person familiar with the matter, and will be held overnight in a cell at a police station. He is scheduled to appear on Tuesday in Magistrate Court in Nassau, the capital of the Bahamas.
A spokesman for Mr. Bankman-Fried declined to comment. Nicholas Biase, a spokesman for the U.S. attorney’s office, also declined to comment.
The Aftermath of FTX’s Downfall
The sudden collapse of the crypto exchange has left the industry stunned.
- A Spectacular Rise and Fall: Who is Sam Bankman-Fried and how did he become the face of crypto? The Daily charted the spectacular rise and fall of the man behind FTX.
- Market Manipulation Inquiry: Federal prosecutors are said to be investigating whether Mr. Bankman-Fried manipulated the market for two cryptocurrencies, leading to their collapse.
- Parental Bonds: Mr. Bankman-Fried’s mother and father, who teach at Stanford Law School, are under scrutiny for their connections to their son’s crypto business.
- Frantic Exchanges: Texts from a group chat that included crypto leaders from rival companies showed the chief executive of Binance, another crypto exchange, accusing Mr. Bankman-Fried of orchestrating trades to destabilize the industry.
“Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the U.S. government, based on a sealed indictment,” Damian Williams, the U.S. attorney for the Southern District of New York, said in a statement. “We expect to move to unseal the indictment in the morning and will have more to say at that time.”
Once a golden boy of the crypto industry and a major donor to the Democratic Party, Mr. Bankman-Fried has seen his vast business and political empire collapse with stunning speed. His exchange filed for bankruptcy last month, and his personal fortune has dwindled to virtually nothing. While he used to be hailed as a modern-day John Pierpont Morgan, he’s now more often likened to Bernie Madoff, who orchestrated the largest Ponzi scheme in history.
Lawyers involved in the case expressed surprise at the suddenness of the arrest. Mr. Bankman-Fried had been widely expected to face a criminal indictment. But complex white-collar fraud cases can take months to build. Until the arrest, Mr. Bankman-Fried was slated to testify remotely about the FTX collapse in a hearing in front of the House Financial Services Committee on Tuesday. The hearing is still set to go ahead, just without Mr. Bankman-Fried’s testimony.
“The American public deserves to hear directly from Mr. Bankman-Fried about the actions that’ve harmed over one million people,” Representative Maxine Waters, who chairs the committee, said in a statement. “The public has been waiting eagerly to get these answers under oath before Congress, and the timing of this arrest denies the public this opportunity.”
Several people familiar with the investigation said the speed with which the authorities moved in filing criminal and civil charges was an indication that prosecutors and regulators had received information from cooperating witnesses.
Mr. Bankman-Fried has been facing scrutiny from dozens of regulators across the world, including the Justice Department, the S.E.C. and the Commodity Futures Trading Commission. Prosecutors in Manhattan have been examining whether FTX broke the law by transferring billions in customer funds to Alameda Research, a crypto hedge fund that Mr. Bankman-Fried also founded and owned.
They have also focused on whether Mr. Bankman-Fried and his hedge fund engaged in market manipulation that may have helped cause the failure of two prominent cryptocurrencies last spring.
Ever since FTX collapsed, the S.E.C. and federal prosecutors have moved quickly with requests for documents from various parties, including some of the big financial firms that invested up to $2 billion in the crypto exchange beginning last year, said two people briefed on the matter.
It is unclear whether the federal authorities are looking at charging anyone else in connection with the collapse of FTX. It is not uncommon for an S.E.C. civil complaint to reveal more information about the events that led to the filing of charges than an indictment.
FTX’s collapse began early last month, when a run on deposits revealed an $8 billion hole in the company’s finances. Mr. Bankman-Fried sought a lifeline from a rival company, the giant crypto exchange Binance, but the deal fell through after Binance examined FTX’s books.
Mr. Bankman-Fried quickly became a villain in the crypto industry. Hundreds of thousands of customers have funds trapped on FTX, with little prospect of getting them back anytime soon.
Surprisingly for an executive facing criminal investigations, Mr. Bankman-Fried had given numerous media interviews in the wake of FTX’s collapse. At the recent DealBook Summit, a New York Times event, he blamed “huge management failures” and sloppy accounting for his company’s implosion, insisting that he “did not ever try to commit fraud” or knowingly dip into the funds of FTX customers to finance other investments.
When FTX filed for bankruptcy, Mr. Bankman-Fried stepped down as chief executive. He was replaced by John Ray, a seasoned corporate turnaround expert who oversaw the unwinding of the energy trading company Enron after an accounting scandal in 2001.
In a bankruptcy filing last month, Mr. Ray said that the management of FTX reflected a “complete failure of corporate control.”
Mr. Ray was also scheduled to testify to the House on Tuesday. In a prepared statement, he said FTX had been a mess.
The collapse stemmed “from the absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals,” he wrote.
Binance introduces new investment platform
Binance is introducing a new cryptocurrency investment known as Binance Smart Chain to offer investors a three per cent daily percentage yield.
According to the investment firm, the three per cent daily percentage was only available to customers who joined its presale.
In a statement issued by the firm, BSC Stake was a staking app built on Binance Smart Chain and audited by Coinratecap. The firm also said it had a total supply of 500,000,000 tokens.
The statement noted that users who joined the presale would get whitelisted to earn the daily profit for a duration of eight months. It explained that whitelisted users can automatically withdraw daily in Binance USD- a digital asset compliant with the strict regulatory standards of the New York State Department of Financial Services.
A statement also stated that the firm aimed to increase the income of investors through staking, and it reads thus.
‘All staked tokens are used on our liquidity pool and also provided to borrowers. BSCS will launch an aggregated liquidity dex that will allow users to swap tokens at a very low-cost fee through the use of Ox technology.
“We pay rewards from fees paid by the borrowers when your token is staked and the fees generated from liquidity dex. 75 per cent goes to stakers, 25 per cent goes to maintenance.”
Verified Twitter users to pay $20 monthly for blue badge, Users react
• Twitter users react to speculated $20 charge
Reports have emerged of a proposed $20 monthly charge to be imposed on Twitter users with verification badge under the new ownership of Elon Musk.
According to a Daily Mail report, Musk wants to launch a pay-for-play verification system in which verified users are charged $20 per month.
Engineers at the micro-blogging company have until November 7 to launch the scheme or face being fired.
The project was communicated to employees on October 30.
The price of the verification is said to be subject to change.
Hours before the report emerged, Musk tweeted: “The whole verification process is being revamped right now.”
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