FTX CEO Sam Bankman-Freid NEW FULL INTERVIEW on ABC — Transcript

Full transcript

1. 0:00a lot of people look at you and see
2. 0:02Bernie Madoff yeah
3. 0:05I mean I don't think that's who I am at
4. 0:08all but I understand why they're saying
5. 0:11that people lost money and people lost a
6. 0:14lot of money and
7. 0:16I mean at the end of the day
8. 0:18look there's a question of what happened
9. 0:20and why and who did what
10. 0:23um what caused the Meltdown and I think
11. 0:27that is reads very differently right
12. 0:29when you when you look at the classic
13. 0:30Bernie Madoff story there was no real
14. 0:34business
15. 0:36there the whole thing as I understand it
16. 0:38I think was was just one one big Ponzi
17. 0:41scheme right fgx that was a real
18. 0:44business he was at the top of the
19. 0:46cryptocurrency world 30 year old
20. 0:48billionaire Sam bankman freed you just
21. 0:51need FTX it's FTX it's a safe and easy
22. 0:54way to get into crypto yeah I don't
23. 0:56think so Super Bowl ads naming stadiums
24. 0:59Steph Curry Gizelle buncher we did a lot
25. 1:02of things to try to uh to try and
26. 1:04bolster our reputation to try and you
27. 1:07know help our brand but in the early
28. 1:09morning hours of November 11th it all
29. 1:11came to an end when FTX filed for
30. 1:13bankruptcy and bankman freed stepped
31. 1:16down as CEO amid reports of FTX customer
32. 1:19funds being used to pay Alameda research
33. 1:21creditors this confirmed by former
34. 1:23Alameda CEO Carolyn Ellison during early
35. 1:26November video meeting with employees
36. 1:28Alameda the crypto trading firm also
37. 1:31founded by bankman freed ABC News
38. 1:33reached out to Carolyn Ellison for
39. 1:35comment but as not heard back one of the
40. 1:37reasons FDX went bankrupt is because
41. 1:41FTX deposits yep were used to pay
42. 1:45alameda's creditors
43. 1:47Carolyn Ellison said you knew about that
44. 1:48is that true you know the best I can
45. 1:50tell uh Alameda did have a big position
46. 1:53open on FTX
47. 1:56um that position uh I think was you know
48. 1:59very over collateralized a year ago
49. 2:02there is a total Market collapse and you
50. 2:05know specifically large correlated
51. 2:07collapse in its assets you know over the
52. 2:09last month and to some extent over the
53. 2:11last year that I you know threatened
54. 2:14that position quite a bit and I think
55. 2:17that's you know as best I understand a
56. 2:19lot of what happened there I I am no
57. 2:21cryptocurrency expert I'm no Finance
58. 2:22expert but I don't think you answered my
59. 2:24question I always ask did you know that
60. 2:28FTX deposits were used to pay off
61. 2:30Alameda creditors
62. 2:34uh
63. 2:37I don't know of FTX deposits being used
64. 2:40to pay off Alameda creditors
65. 2:43are you I
66. 2:45would which predators are you referring
67. 2:47to Carolyn Ellison said that you all
68. 2:50knew
69. 2:51that these funds were used were put into
70. 2:54Alameda they were the funds owned
71. 2:57by your depositors
72. 2:59so I can't speak for who knew what you
73. 3:03know a lot of the customers on FTX did
74. 3:05have you know borrowers either you know
75. 3:07in dollars or Bitcoin or Euros but as
76. 3:10you know the FTX terms of service yep
77. 3:12tell the people who signed up none of
78. 3:14the digital Assets in your account are
79. 3:15the property of or shall be or may be
80. 3:17loaned to FTX Trading but you're saying
81. 3:21that happened my understanding is a few
82. 3:23things happen the first is there is a
83. 3:25margin trading facility on FTX by which
84. 3:28users can lend out funds by which other
85. 3:30users borrow funds and so there are
86. 3:33explicit cases where there is you know
87. 3:36marching send where there is borrow
88. 3:37lending if the Alameda is borrowing the
89. 3:40money that belongs to FDX depositors
90. 3:44that's a bright red line isn't it there
91. 3:47are a lot of cases where that's actually
92. 3:48explicitly part of the programs and that
93. 3:52are not here here it says that the
94. 3:53digital assets may not be loaned to FTX
95. 3:55Trading
96. 3:56they can't be loaned out
97. 4:00I
98. 4:05there existed a borrow lending facility
99. 4:07on FTX and and I think that's probably
100. 4:11covered I don't remember exactly where
101. 4:13but somewhere else in the terms of
102. 4:14service but they'd have to approve of
103. 4:15that they're saying they didn't approve
104. 4:16of it here they're saying you approved
105. 4:18of it if you rewind
106. 4:20to you know the beginning of FTX
107. 4:23um where
108. 4:25you know some customers were you know uh
109. 4:28I think in line with sort of existing
110. 4:30relationships that that they've had at
111. 4:32least in some cases wiring money
112. 4:33straight to Alameda research in order to
113. 4:37trade on FTX so you do know and you did
114. 4:40know that FDX deposits were being
115. 4:43funneled to Alameda so I was vaguely
116. 4:47aware that that was how some virus were
117. 4:50being sent in the first place
118. 4:53um didn't that set off alarm bells in
119. 4:54your head so there are a lot of people
120. 4:56who are involved in that process and
121. 4:58look I really deeply wish that I had
122. 5:01taken
123. 5:02like a lot more responsibility for
124. 5:05understanding
125. 5:06what the details were of what was going
126. 5:08on there I knew that legal was involved
127. 5:11I knew that other groups at the company
128. 5:12were involved that you know there were
129. 5:14agreements drafted up but you're
130. 5:16ultimately responsible and ultimately
131. 5:17absolutely like I look I should have
132. 5:20been on top of this and I feel really
133. 5:23really bad and rightful that I wasn't
134. 5:25and a lot of people got hurt and that
135. 5:28that's on me here's what Mark Cuban has
136. 5:30to say about that yep he said if I were
137. 5:32him I'd be afraid of going to jail for a
138. 5:34long time
139. 5:39at the end of the day you know it's not
140. 5:41my call what happens and uh the world
141. 5:45will judge me as it will are you worried
142. 5:46about going to jail
143. 5:50there are a lot of things that are
144. 5:53worrying me right now
145. 5:55um and
146. 5:57you know as best as possible I'm trying
147. 5:59to focus on what I can do going forward
148. 6:01to be helpful and you know let whatever
149. 6:05you know Regulatory and legal processes
150. 6:07are happening play out as I will I do
151. 6:09want to move on but this is just finally
152. 6:11on this this is really a yes or no
153. 6:13question yeah
154. 6:14Carolyn Ellison says you knew that FTX
155. 6:18funds were being funneled to Alameda did
156. 6:20you know that I knew that there is an
157. 6:22open margin position there and that that
158. 6:24involved no but that's all that I'm
159. 6:25asking if she's in court and you're in
160. 6:28court and she's under oath and you're
161. 6:30under oath and you're asked did you know
162. 6:32that these funds were being funneled to
163. 6:34Alameda what is your answer
164. 6:42I did not know that there is any
165. 6:43improper eye use of customer funds you
166. 6:48also took out a one billion dollar loan
167. 6:50what was that for that was generally for
168. 6:53reinvesting in the company I was not for
169. 6:55you know consumption I you know to my
170. 6:58knowledge I have basically nothing left
171. 7:01um you know basically everything I had
172. 7:03was invested in the business I expect
173. 7:05I'm gonna have nothing at the end of
174. 7:06this I ain't got a hundred thousand
175. 7:08dollars left in my bank account last I
176. 7:10checked and I I think I have you know uh
177. 7:14One credit card working with that right
178. 7:16now earlier this summer you thought you
179. 7:18had what 32 billion probably 20 but uh a
180. 7:21whole lot more than I do now I can't
181. 7:23imagine what it feels like to go from 20
182. 7:25billion dollars to a hundred thousand
183. 7:27dollars yeah it's I mean it's been a
184. 7:31really it's been a really humbling fall
185. 7:33in in a lot of ways how do you explain
186. 7:35the failure was it an inattention
187. 7:38arrogance
188. 7:40um it's a good question is it unethical
189. 7:43some part of it was just literal
190. 7:46distraction
191. 7:47I really should have spent some time
192. 7:50each day taking a step back and saying
193. 7:53what are the most important things here
194. 7:56right and like how do I have oversight
195. 7:59of those and make sure that I'm not
196. 8:01losing track of those and frankly I did
197. 8:04a pretty incomplete job at that I spent
198. 8:06a lot less time looking at assets and
199. 8:08looking at balances and positions
200. 8:09because that's not where Revenue came
201. 8:11from and so it I wasn't seeing as a
202. 8:15court business driver obviously it was a
203. 8:17core risk and that was a huge mistake of
204. 8:19mine to not think more about that you
205. 8:21said one of your great talents in a
206. 8:23podcast was managing risk that's right
207. 8:25and it's obviously wrong well I it's I
208. 8:28think that there is something maybe even
209. 8:30deeper wrong there which was I wasn't
210. 8:32even
211. 8:33trying like I wasn't
212. 8:36spending any time or effort trying to
213. 8:39manage risk on FTX trying like and that
214. 8:42that obviously that's a stunning station
215. 8:44what that's a pretty stunning admission
216. 8:47yeah I mean it I don't know what to say
217. 8:49like what happened happened and like if
218. 8:51I had been if I had been spending an
219. 8:54hour a day thinking about risk
220. 8:55management on FTX I don't think that
221. 8:57would have happened I think I I stopped
222. 9:00working as hard for a bit you know
223. 9:02honestly if I look back on myself
224. 9:04I think
225. 9:06I got a little cocky I've made more than
226. 9:09a little bit
227. 9:10um and I think part of me like
228. 9:13you know felt like
229. 9:17um
230. 9:17like we'd made it
231. 9:20as I said that was a pretty stunning
232. 9:22admission the whole job of the head of a
233. 9:24firm like that is managing right at risk
234. 9:27exactly and he wanted to he reached out
235. 9:30he desperately he went against the
236. 9:31advice of his lawyers uh he thanked me
237. 9:34at the end we said we talked for close
238. 9:36to two hours and you saw he didn't
239. 9:37Flinch no from the tough questions but
240. 9:39even though he had a hard time at times
241. 9:41answering them and you know he just
242. 9:44wants to speak his mind