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Sam Bankman-Fried ‘Wasn’t Even Trying’ to Manage Risk at FTX, He Says

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FTX founder
Sam Bankman-Fried
said he made no effort to manage risk at the digital-asset exchange that filed for bankruptcy in November, part of a blitz of public statements about major oversight failures at the company.

“I wasn’t even trying, like, I wasn’t spending any time or effort trying to manage risk on FTX,” Mr. Bankman-Fried said in an interview with George Stephanopoulos of ABC News that was broadcast Thursday on “Good Morning America.”

“I don’t know what to say,” he said. “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.”

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Mr. Bankman-Fried, who stepped down as FTX’s chief executive as the company filed for bankruptcy, agreed to be interviewed for nearly two hours, defying the advice of his lawyers, Mr. Stephanopoulos said. The televised appearance marked Mr. Bankman-Fried’s second on-camera appearance in two days, as he continued to offer public explanations for FTX’s collapse.

A lawyer for Mr. Bankman-Fried didn’t respond to a request for comment.

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.

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Risk issues weren’t seen as a “core business driver” at FTX, Mr. Bankman-Fried said in Thursday’s interview, adding that he did a “pretty incomplete job” at oversight. 

“That was a huge mistake of mine to not think more about that,” he said.

He also said he didn’t know about any improper use of customer funds when asked about money allegedly being funneled from FTX to Alameda Research. 

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Mr. Bankman-Fried made similar remarks Wednesday in an interview with reporter Andrew Ross Sorkin at the New York Times DealBook summit. In an appearance lasting more than an hour, he said that while he didn’t intend to commit any fraud, he acknowledged that there had been a “massive failure of oversight of risk management” at FTX.

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FTX founder Sam Bankman-Fried, on screen, is interviewed by Andrew Ross Sorkin at the New York Times DealBook Summit on Wednesday.



Photo:

Michael M. Santiago/Getty Images

Though he founded FTX with an intent to address what he saw as “risk management blowouts” at other crypto derivatives exchanges, he didn’t focus on those issues “for the last year or two” as he pivoted to looking at future business avenues and getting FTX licensed, he said. 

Mr. Stephanopoulos questioned Mr. Bankman-Fried about speculation that he might ultimately spend time in prison in connection with the problems at FTX and Alameda. 

Mr. Bankman-Fried said that a lot of things worry him right now, but that he would let regulatory and legal processes play out.

Mr. Bankman-Fried has repeatedly offered public explanations for the downfall of FTX—in addition to the video interviews, he has crafted an apology letter to employees, spoken to reporters at Vox and New York magazine, and he has been prolific on Twitter. The multibillion-dollar collapse left him with about $100,000 in the bank and a single credit card, down from a net worth he estimated at $20 billion, Mr. Bankman-Fried said in Thursday’s interview.

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Some legal observers have questioned whether it is wise for Mr. Bankman-Fried to make a voluminous record of public statements in light of reported investigations by Securities and Exchange Commission staff and federal prosecutors. 

Public statements by a target of any investigation can open up criminal liability if prosecutors can find discrepancies between those statements and internal communications, said Seth DuCharme, a former top Brooklyn federal prosecutor who is now a partner at law firm Bracewell LLP.

But certain charismatic persuaders can find it hard to turn off the charm that earlier helped them build their wealth and reputation, Mr. DuCharme said.

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“A lawyer says to them, ‘Hey, keep your mouth shut,’” he said. “That’s incompatible with their prior experience and a very, very difficult impulse to suppress.”

Mr. Bankman-Fried is focused on keeping customers well-informed and isn’t concerned about what others might think about his talking to the media, a spokesman said.

“While everyone on the sidelines is entitled to their own opinion, ultimately the only opinion that matters is Mr. Bankman-Fried’s,” the spokesman said. “The only person who can honestly tell Mr. Bankman-Fried’s story is Mr. Bankman-Fried, and he will continue to do so.”

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The collapse of FTX has set off the largest crypto-related bankruptcy ever, and court filings are already shedding light on what went wrong and how complicated things could get. Here are three things to know about the company’s bankruptcy process. Photo: Lam Yik/Bloomberg News

Write to Richard Vanderford at Richard.Vanderford@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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