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The Full Interview with Sam Bankman-Fried after FTX Collapse — Transcript

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0:00you just need FTX it's FTX it's a safe
0:03and easy way to get into crypto
0:05I don't think so he was at the top of
0:07the cryptocurrency world 30 year old
0:09billionaire Sam bankman freed it's the
0:12first Network interview with Sam bankman
0:13freed the founder of the cryptocurrency
0:16exchange FTX and George we know that you
0:18travel down to the Bahamas and speak
0:20with us in that Penthouse that he said
0:22and used to work with his former
0:23colleagues at FTX now alone with his
0:25parents and Robin this was really
0:26something a wild interview almost two
0:28hours we sat down it felt at times like
0:31a therapy session he took every tough
0:34question he wanted to speak out about
0:36all the questions surrounding this
0:37collapse remember about a month ago he
0:39was worth about 20 billion dollars now
0:41he says he's worth a hundred thousand
0:43dollars he's under investigation by
0:45prosecutors and Regulators but he
0:47insists he did not commit fraud let's
0:48take a look
0:49I I am no cryptocurrency expert I'm no
0:52Finance expert but I don't think you
0:54answered my question I always ask you
0:56did you know that FTX deposits were used
0:59to pay off Alameda creditors
1:05uh
1:07I don't know of FTX deposits being used
1:10to pay off Alameda creditors
1:13are you uh which creditors are you
1:17referring to
1:17[Music]
1:25[Music]
1:30but in the early morning hours of
1:31November 11th it all came to an end when
1:34FTX filed for bankruptcy and bankman
1:37freed stepped down as CEO amid reports
1:39of FTX customer funds being used to pay
1:42Alameda research creditors this
1:44confirmed by former Alameda CEO Carolyn
1:46Ellison during early November video
1:48meeting with employees Alameda the
1:51crypto trading firm also founded by
1:53bankman freed ABC News reached out to
1:55Carolyn Ellison for comment but has not
1:57heard back
1:59a lot of people look at you and see
2:01Bernie Madoff yeah
2:04I mean I don't think that's who I am at
2:07all but I understand why they're saying
2:10that people lost money and people lost a
2:13lot of money and
2:15I mean at the end of the day
2:17look there's a question of what happened
2:19and why and who did what
2:22um what caused the Meltdown and I think
2:26that is reads very differently right
2:28when you when you look at the classic
2:29Bernie Madoff story there was no real
2:33business
2:34there the whole thing as I understand it
2:37I think was was just one one big Ponzi
2:40scheme right fgx that was a real
2:43business Super Bowl ads naming stadiums
2:47Steph Curry Gizelle buncher we did a lot
2:49of things to try to uh to try and
2:52bolster our reputation to try and you
2:54know help our brand
2:56as I said that was a pretty stunning
2:58admission the whole job of the head of a
3:00firm like that is managing right at risk
3:03exactly and he wanted to he reached out
3:06he desperately he went against the
3:07advice of his lawyers uh he thanked me
3:10at the end we said we talked for close
3:12to two hours and you saw he didn't
3:13Flinch no from the tough questions but
3:15even though he had a hard time at times
3:17answering them and you know he just
3:20wants to speak his mind now one of the
3:22reasons he said he wants to speak his
3:23mind is is he still hopes that in some
3:26way he can contribute to the idea of
3:29getting some of the depositors monies
3:31back now I asked him is that delusional
3:33uh because that's a lot of money it's a
3:36lot of money and he has no role in FTX
3:39right now but he is under facing several
3:40investigations at this point but he
3:42wants to tell his side of the story I
3:44wonder how the people who lost money
3:45will respond to this interview because
3:48clearly he struggled to answer a lot of
3:50these key questions we will see one of
3:51the reasons FDX went bankrupt is because
3:56FTX deposits yep we're used to pay
3:59alameda's creditors Carolyn Ellison said
4:02you knew about that is that true you
4:04know the best I can tell uh Alameda did
4:07have a big position open on FTX
4:10um that position uh I think was you know
4:14very over collateralized uh a year ago
4:17there is a total Market collapse and you
4:20know specifically large correlated
4:21collapse in its assets you know over the
4:23last month and to some extent over the
4:25last year that I you know threatened
4:28that position quite a bit and I think
4:31that's you know as best I understand a
4:33lot of what happened there Carolyn
4:34Ellison said that you all knew
4:37that these funds were used were put into
4:40Alameda they were the funds owned
4:43by your depositors
4:46so I can't speak for who knew what you
4:49know a lot of the customers on FTX did
4:51have you know borrowers either you know
4:53in dollars or Bitcoin or Euros but as
4:56you know the FTX terms of service tell
4:58the people who signed up none of the
5:00digital Assets in your account are the
5:02property of or shall be or maybe loaned
5:04to FTX Trading
5:06but you're saying that happen my
5:08understanding is a few things happen the
5:10first is there is a margin trading
5:12facility on FTX by which users can lend
5:16out funds by which other users borrow
5:17funds and so there are explicit cases
5:20where there is you know marching send
5:23where there is borrow lending if the
5:24Alameda is borrowing the money that
5:27belongs to FDX depositors
5:30that's a bright red line isn't it there
5:33are a lot of cases where that's actually
5:35explicitly part of the programs and that
5:38are happening here it says that the
5:40digital assets may not be loaned to FTX
5:42Trading
5:43they can't be loaned out
5:46I
5:51there existed a borrow lending facility
5:54on FTX and and I think that's probably
5:57covered I don't remember exactly where
5:59but somewhere else in the terms of
6:00service but they'd have to approve of
6:02that they're saying they didn't approve
6:03of it here they're saying you approved a
6:04bit if you rewind
6:06to you know the beginning of FTX
6:09um where
6:11you know some customers were you know uh
6:15I think in line with sort of existing
6:17relationships that they've had at least
6:18in some cases wiring money straight to
6:21Alameda research in order to trade on
6:24FTX so you do know and you did know that
6:27FDX deposits were being funneled to
6:30Alameda so I was vaguely aware that that
6:35was how some wires were being sent in
6:38the first place
6:39um didn't that set off alarm bells in
6:40your head so there are a lot of people
6:43who are involved in that process and
6:45look I really deeply wish that I had
6:47taken like a lot more responsibility for
6:51understanding
6:53what the details were of what was going
6:55on there I knew that legal was involved
6:57I knew that other groups at the company
6:59were involved that you know there were
7:01agreements drafted up but you're
7:02ultimately responsible and ultimately
7:04absolutely like I look I should have
7:07been on top of this and I feel really
7:09really bad and regretful that I wasn't
7:11and a lot of people got hurt and that
7:14that's on me here's what Mark Cuban has
7:16to say about that yep he said if I were
7:19him I'd be afraid of going to jail for a
7:21long time
7:24um
7:25at the end of the day you know it's not
7:28my call what happens and uh the world
7:31will judge me as it will are you worried
7:33about going to jail
7:37there are a lot of things that are
7:39worrying me right now
7:41um and
7:43you know as best as possible I'm trying
7:45to focus on what I can do going forward
7:48to be helpful and you know let whatever
7:51you know Regulatory and legal processes
7:53are happening play out as they will I do
7:56want to move on but just just finally on
7:58this this is really a yes or no question
8:00yep Carolyn Ellison says you knew that
8:03FTX funds were being funneled to Alameda
8:06did you know that I knew that there is
8:09an open margin position there and that
8:10involves no but that's all that I'm
8:12asking if she's in court and you're in
8:14court and she's under oath and you're
8:16under oath and you're asked did you know
8:19that these funds were being funneled to
8:21alamedia what is your answer
8:28I did not know that there is any
8:30improper uh use of customer funds you
8:34also took out a one billion dollar loan
8:37what was that for that was generally for
8:39reinvesting in the company I was not for
8:41you know consumption I
8:44you know to my knowledge I have
8:45basically nothing left
8:48um you know basically everything I had
8:49was invested in the business I expect
8:51I'm gonna have nothing at the end of
8:53this I ain't got a hundred thousand
8:55dollars left in my bank account last I
8:57checked and I think I have you know uh
9:00One credit card working with that right
9:02now earlier this summer you thought you
9:04had what 32 billion probably 20 but uh a
9:08whole lot more than I do now I can't
9:10imagine what it feels like to go from 20
9:11billion dollars to a hundred thousand
9:13dollars yeah it's I mean it's been a
9:17really it's been a really humbling fall
9:19in in a lot of ways how do you explain
9:22the failure was it an inattention
9:24arrogance
9:27um it's a good question is it unethical
9:29some part of it was just literal
9:32distraction
9:34I really should have spent some time
9:37each day taking a step back and saying
9:40what are the most important things here
9:42right and like how do I have oversight
9:45of those and make sure that I'm not
9:47losing track of those and frankly I did
9:50a pretty incomplete job at that I spent
9:52a lot less time looking at assets and
9:54looking at balances and positions
9:56because that's not where Revenue came
9:58from and so it I wasn't seen as a court
10:01business driver obviously it was a core
10:03risk and that was a huge mistake of mine
10:06to not think more about that that you
10:08said one of your great talents in a
10:09podcast was managing risk that's right
10:11and it's obviously wrong well I it's I
10:15think that there is something maybe even
10:16deeper wrong there which was I wasn't
10:19even
10:20trying like I wasn't
10:23spending any time or effort trying to
10:25manage risk on FTX trying like and that
10:29that obviously that's a stunning station
10:30what that's a pretty stunning admission
10:33yeah I mean it I don't know what to say
10:35like what happened happened and like if
10:38I had been if I had been spending an
10:40hour a day thinking about risk
10:42management on FTX I don't think that
10:44would have happened I think I stopped
10:46working as hard for a bit you know
10:48honestly if I look back on myself
10:51I think
10:52I got a little cocky I made more than a
10:55little bit
10:56um and I think part of me like
10:59you know felt like
11:03um
11:04like we'd made it
11:06meantime we are learning a lot more
11:08about the stunning collapse of
11:10cryptocurrency giant FDX it was once
11:12valued at 32 billion right now
11:14effectively worthless in bankruptcy
11:17leaving creditors and customers
11:18wondering if they're ever going to see
11:19their money Again Sam bankman free the
11:21demand behind that company he actually
11:23talked to cnbc's Andrew Ross Sorkin at
11:26the New York Times deal book Summit
11:28yesterday it was his first extended
11:30on-camera live interview and he appeared
11:33to express some Contrition over what's
11:34happened
11:37I didn't ever uh try to commit fraud on
11:40anyone I I was excited about the
11:43prospects of FTX a month ago I saw it as
11:46a thriving growing business I was
11:48shocked by what happened this month and
11:51you know reconstructing it I
11:54for other things I wish I had done
11:56differently
11:57there was no person who was chiefly in
12:00charge of
12:02positional risk of customers on FTX and
12:05that feels pretty embarrassing in
12:07retrospect joins us right now that was
12:10kind of a big confession there I mean
12:12this company worth 32 billion now he's
12:13got like a hundred thousand dollars on a
12:15credit card or something like that is
12:17the is this is what he's saying like I
12:19had no idea what went wrong is that
12:21plausible I think a lot of people asking
12:23that question this morning and whether
12:25his answers were truthful what appears
12:28to have happened is he was running the
12:29equivalent of a stock exchange taking
12:31people's money yeah that they thought
12:33they were investing in cryptocurrencies
12:34he was also running another hedge fund
12:37his own investment firm investing in
12:39cryptocurrencies and he was quote
12:41unquote loaning money from those people
12:43to himself and then gambling with that
12:46money some people call that stealing
12:49um he says that he didn't intend to do
12:51that and he didn't realize what was
12:53happening but of course as you might
12:55imagine lots of people asking lots of
12:57questions that was the best summary I've
12:59heard so far
13:00here's the thing I'm watching this
13:02interview yesterday and I'm thinking why
13:04in the world is this guy talking to
13:06Andrew I'm sorry there's no reason that
13:08I would assume that his lawyers would
13:10think that was a good idea this is part
13:12of of what what else he said from the
13:14Bahamas
13:15I think you have the duty to do
13:17everything I can to try and do what's
13:19right if there is anything I can do to
13:21to try and help customers out here and
13:25uh I don't see what good is accomplished
13:27by me just sitting locked uh you know
13:31you know in a room pretending the
13:33outside world doesn't exist okay so
13:36there's the explanation about why he was
13:37talking but I mean criminal liability
13:38what's the potential for that here I
13:40think it's very real the Department of
13:41Justice investigating he is living in
13:44the Bahamas that's where he had
13:45Incorporated the company to live outside
13:46of the jurisdiction of the United States
13:49by the way his parents law professors at
13:52Stanford University and he said
13:54specifically this was against the advice
13:56of his lawyers to conduct and
13:58participate of course can I ask one last
14:00question these they're regular everyday
14:02people who invest in this they trusted
14:04they put some put their life savings
14:06into it is there any shot that those
14:08people will get any return any money
14:11back after this there's something called
14:13ftx.us it's the U.S branch of this and
14:17that there is possibly some money there
14:19so for for some Americans who who
14:21invested through that exchange there
14:23might be some possibility of getting
14:25money back but I received emails and
14:27letters and notes from people who said
14:28they lost their lives today wow terrible
14:31all right let's talk uh let's talk a bit
14:33about Sam free because you you want to
14:37you know you do uh FTX founder Sam
14:39bankman free did continue to speak out
14:42you want him he's available now
14:44apparently uh this of course after the
14:45collapse of the cryptocurrency exchange
14:47he sat down with Andrew Ross Sorkin
14:49yesterday at the deal book Summit
14:51bankman freed struck back against those
14:53who accuse him of fraud
14:56look
14:58I screwed up like
15:01I was CEO I had a responsibility that
15:03means that I was responsible ultimately
15:04frustrating the right things and I mean
15:07I we didn't like
15:10we messed up big
15:12wow Andrew Ross sorkins
15:15didn't really keep a close eye on that
15:17Alameda apparently uh Jim uh it was his
15:20first interview apparently he may have
15:21done another one already today
15:23uh I would assume his lawyers have just
15:26thrown their hands up yeah we're just
15:28done with you but he feels compelled
15:29somehow to continue to speak it's
15:31obviously a fascinating story for many
15:33uh regardless of whether they have any
15:36any involvement in the crypto world at
15:38all it's still uh been fascinating to
15:40watch and listen to and obviously Kudos
15:42it was a fabulous interview by Andrew
15:44now there's a couple things
15:46now having gone to Harvard Law School
15:48but you know and became a member of the
15:50law of the bar I will say this that guy
15:53is a clueless idiot intent means nothing
15:56saying sorry means nothing if you
15:58co-mingle if you had no record keeping
16:01those are against the law
16:03it's not like they're like you know what
16:04I was sloppy and I feel bad and I'm
16:07sorry no you were sloppy you didn't keep
16:09records illegal all right so if you're
16:12admitting to illegality even though you
16:14think that you had no intent the U.S
16:17attorney does not care one wit about 10.
16:20what the U.S attorney cares about is did
16:22you break the law like you don't go to
16:24the U.S attorneys I'm really sure
16:28anybody no it's against the law now
16:31being a nice guy which he clearly is
16:33he's irrelevant people that I've spoken
16:37to met him and known him describe him
16:39that way it doesn't mean a thing it
16:41means absolutely nothing some of the
16:42nicest people I know have spent some
16:44serious time in jail um and he I mean he
16:47does seem genuinely sorry uh but again
16:50there are many out there who believe
16:51he's just a pathological liar well I'm
16:53that you're a pathological liar he's a
16:56con man
16:57uh he he admits to do it to co-mingling
17:01uh to a cast that shouldn't be
17:03commingled but then he says it doesn't
17:06really matter I feel badly well you know
17:08what again it doesn't matter if his
17:10pathological liar or the most honest man
17:11in America the fact is he broke the law
17:14and I understand why his lawyers don't
17:16want to talk because a lot of times what
17:18the lawyer says if you admit and you do
17:20not seek fifth amendment protection we
17:23can't help you you will probably go to
17:25jail
17:26see lawyers say you know it's perhaps
17:29better that you don't say that you did
17:30the crime
17:32yeah that tends to be why lawyers are
17:34lawyers
17:36um well it's an important point you make
17:37again his saying I didn't knowingly
17:39co-mingle funds doesn't so that it
17:41really I mean
17:42okay I was in it if you co-mingle funds
17:46your lawyers and I had good lawyers said
17:48okay that's you'll probably go to jail
17:49for that don't commingle
17:52so I would say but I am very technical
17:55mingle which I did not call me go for
17:58now you know wow I mean he's still
18:00hanging at the Albany Club although I
18:03don't know how he's paying those monthly
18:04dues but she's in Bakers Bay doomeda I
18:07mean no he's at the Albany Club no but
18:09if you looked at some of these Bakers
18:10Bay
18:13what about it I'm sorry but we we should
18:16just take up Golf and go to these places
18:18they're very expensive Jim
18:20yeah but if you invite me as your guest
18:22now I've just been some luck in it now
18:24my wife's taking a look I think you
18:25might even have a sense I don't think
18:27you might have to sell a couple of hours
18:29how's that stock doing wheels up so good
18:32coming up and Jimmy stop doing the
18:36interviews from outside prison why do
18:38the media why are they so in love with
18:39this guy I'll give you the answer but
18:40let me start with a really quick
18:41investment tip for everybody watching oh
18:43good luck get it never trust your life
18:45savings to a guy who shows up to the
18:47meeting in a stained t-shirt with shorts
18:49on like that was the tell there was
18:51never any vetting of this whatsoever the
18:53reason the media is trying to
18:54rehabilitate His Image is some good guy
18:57who ran into some bad luck is because it
18:59rehabilitates their image for not doing
19:01their due diligence on vetting all of
19:03this stuff they were complicit in
19:04pushing every celebrity Tom Brady Larry
19:06David guys that I love who signed up to
19:09help out and film their little videos
19:10and you got to buy this thing did no
19:12background work on the company clearly
19:14because the guy running it didn't have
19:16any background on the company but the
19:17reality that he's now being like feted
19:19by the media give it up for Sam Bachman
19:21freed if that that's embarrassing this
19:22is like Bernie basically if Bernie
19:24Madoff donated to Progressive causes
19:26he'd have a statue right now somewhere
19:28on Park Avenue like what a great guy he
19:30tried no he stole people's life savings
19:32I should be in jail
19:34please welcome back to the stage Andrew
19:37Ross Sorkin
19:42[Music]
19:47thank you everybody
19:49and thank you for staying for the entire
19:51day so that we can uh do what I think
19:55may be one of the most important
19:56interviews we will do uh today
20:00um
20:01in the span of about one week Sam
20:03bankman freed went from a billionaire
20:06the White Knight of the crypto world and
20:10running one of the largest exchanges to
20:12what some people think has become a
20:14wanted man FTX was once valued at 32
20:17billion dollars it's now effectively
20:19worthless in bankruptcy we're going to
20:21talk about that and whether investors
20:23will ever get money back you know
20:24multiple billions owed to creditors and
20:27big questions in the wake of the
20:28collapse Bitcoin fell to its lowest
20:30price in two years and on Monday block
20:33five which had been bailed out by FTX
20:35filed for bankruptcy the rapid fall of
20:39this Empire has left so many questions
20:41about crypto about the future of it and
20:45whether it can be trusted again
20:47Sam bankman free joins us right now live
20:50from the Bahamas Sam
20:53I want to thank you for joining us uh
20:55this afternoon I appreciate your
20:58willingness to have this conversation as
21:01I said at the outset of today there are
21:04a lot of questions that need to be asked
21:06and also need to be answered
21:09as you know a lot of people have been
21:11hurt genuinely hurt and my hope is that
21:15over the time we have together that we
21:19can have a candid conversation about
21:20what happened
21:22how it happened
21:23there are people who are angry and they
21:25are seeking answers I just want
21:28everybody in the audience to know that I
21:30received thousands of letters and emails
21:33even the past couple days from a lot of
21:36these people who feel like they're
21:37victims and some of them have questioned
21:40whether we should have this conversation
21:42whether we should have this interview
21:44um
21:45there are people who don't believe that
21:47this conversation should happen and I
21:49just want to say that I think our job as
21:50journalists is
21:53to have those conversations is to ask
21:55those questions and seek those answers
21:56on behalf of the public and that is
21:59especially true right now
22:01Sam
22:03here's where I want to start this
22:04conversation if we could
22:06um I think at this point there are two
22:09ways to view what has happened at FTX
22:12and I know we'll get into all of the
22:14details in a moment
22:15but I'm just going to go very basic uh
22:18there's a generous View
22:19and the generous view is that you are a
22:22young man who made a series of terrible
22:25terrible very very bad decisions
22:28the less generous view is that you have
22:31committed a massive fraud
22:33that this is a Ponzi scheme a
22:35manipulation of the system
22:37and I want to start there because I
22:39think that there are so many people who
22:41have that question which is what is this
22:43and what did happen
22:46yeah look thanks for having me and
22:50um and at the end of the day I I was CEO
22:52of FTX and that means whatever happened
22:55why ever it happened I had a duty I had
22:58a duty to all of our stakeholders to our
23:00customers uh our creditors ahead of Duty
23:03to our employees to our investors and
23:05and to The Regulators of the world uh to
23:08do right by them to make sure the right
23:09things happen to the company and uh
23:11clearly I didn't do a good job of that
23:13um clearly I
23:15um I made a lot of mistakes or are
23:17things I would give anything to be able
23:19to do over again
23:21um I didn't ever uh try to commit fraud
23:24on anyone I I was excited about the
23:27prospects of FTX a month ago
23:30um I saw it as a thriving growing
23:32business I was shocked by what happened
23:34this month and you know reconstructing
23:36it I
23:38where are there things I wish I had done
23:40differently
23:41well let's let's talk about some of the
23:43things you you would want to have done
23:45differently uh but I don't want this to
23:46be an abstraction uh for folks because
23:48it's a lot of big numbers
23:50um and often doesn't feel human
23:53um one of the the letters I got uh I
23:56want to read to you Sam
23:58um because it's from a gentleman who
24:00said that he lost his life savings
24:02and the subject line is Sam bankman
24:05freed stole two million dollars from me
24:08says Andrew can you please ask SBF why
24:12he decided to steal my life savings
24:15and the 10 billion dollars more from
24:17customers to give
24:19to his hedge fund Alameda can you ask
24:22him why his hedge fund was leveraging
24:24long all of these s coins
24:28I'm going to keep it polite for the kids
24:31please ask him if he thinks the thinks
24:33what happened was fraud
24:36these are the kinds of letters that I've
24:37been getting repeatedly over the past
24:40several days what do you tell this this
24:42man
24:43yeah
24:44um I mean I'm deeply sorry about what
24:46happened
24:48um
24:49here's you know the long and short of
24:52what happened and I'll start by saying
24:54uh just to make a distinction here you
24:58look at the US platform you look at the
24:59international platform
25:01the US platform uh is a US regulated
25:03platform with American users to my
25:06knowledge that's fully solvent that's
25:07fully funded and uh you know I believe
25:11that withdrawals could be opened up
25:12today and everyone could be made whole
25:15from that that none of these problems
25:16pray played the the US platform
25:20um then you look at the international
25:22platform uh you know for their non-us
25:26users and uh I mean as the letter says
25:30uh
25:32Alameda research did have a long
25:34position and the international platform
25:38it's a margin trading platform it's a
25:40derivatives platform it's a platform
25:42where all the clients were you know
25:44going on placing something as collateral
25:46and using that to put on a position
25:48whether that's a Futures position a spot
25:51position a borrow
25:53um and you know what the exchange was
25:55storing was the collateral from all of
25:57those positions uh Alameda research was
26:00you know one of those that put on
26:01positions there and as I try and
26:03reconstruct this
26:05um you know over the last month I I have
26:07limited access to data but
26:09um my my my my view of it um from what I
26:13have been able to see is roughly that
26:16um you know basically like a year ago
26:19um Alameda had I think something like 10
26:22leverage you know had something like 10
26:25times the assets of the position that it
26:27had on over the courts of the last year
26:29there were a number of Market crashes
26:32um that drove the value of those assets
26:34down and The Leverage up
26:36um I think it was to my knowledge still
26:38under 2x leverage you know as of uh a
26:42month ago
26:43um you look at the what happened this
26:45month and uh you know in a few days all
26:48out
26:49um I mean PR assault which led to a
26:51total Market collapse in a pretty short
26:54period of time no bidside liquidity
26:57um I think more than 10 billion dollars
26:59wiped off in the matter of days and uh
27:03realistically speaking
27:04no ability for FTX to be able to to
27:07liquidate that position and generate
27:09everything that was owed I think the
27:11bigger question is where Alameda got the
27:15loan from which is to say that there is
27:18a view that this is about co-mingling of
27:20funds
27:21right and and in that letter that I just
27:24read you
27:26um this gentleman actually copy and
27:29pasted
27:30the terms of service for FTX into the
27:34email and I just want to read you this
27:36it says None of the digital Assets in
27:39your account
27:39are the property of or shell or maybe
27:43loan two FTX trading FTX trading does
27:46not represent or treat digital Assets in
27:48users accounts as belonging to FTX
27:51trading so how is it possible that
27:54Alameda
27:56had this loan of such a large size
28:01so
28:02there is at piece from the terms of
28:04service
28:05um but there were a number of other
28:07parts of the terms as there's a number
28:09of other parts of the platform on top of
28:10that there is the borrow lending
28:12facility where users were lending
28:14billions of dollars of assets to each
28:16other
28:17um you know collateralized by assets on
28:19the exchange
28:20um you had uh and you got obviously
28:22Futures contracts where there are
28:24leveraged positions on now of course all
28:26of this
28:28um it's meant to be the case that these
28:30are positions where fgx could uh if it
28:34needed to Margin Call those positions
28:36and close them down in times such that
28:40it would cover all of those uh you know
28:42all those shorts all those liabilities
28:44obviously that wasn't the case here and
28:47that's a massive failure of oversight of
28:49risk management
28:51um and of uh you know diffusion of
28:53responsibility from from myself running
28:55FTX
28:56but just make this very straight was
28:59there commingling of funds that's what
29:01it appears like it appears like there's
29:03a genuine commingling of the funds that
29:06are of FTX customers that were not
29:09supposed to be commingled with your
29:11separate firm
29:14I ain't knowingly co-mingle funds and
29:16again one piece of this you have the
29:18margin trading you have you know
29:20customers borrowing from each other
29:21almie is one of those I was frankly
29:23surprised by how big alameda's position
29:26was which points to another failure of
29:28oversight on my part
29:31um and uh failure to appoint someone to
29:35be chiefly in charge of that uh but uh I
29:39wasn't trying to co-mingle funds
29:41let me ask you this the Wall Street
29:43Journal reported that Carolyn Ellison
29:46um told Almeda staffers that Alameda
29:48used FTX client funds to cover loans
29:52that were being recalled because of the
29:54lunar triggered credit crunch
29:57Carolyn says that she Sam Gary were
30:00aware of this
30:02how do you square that with what you
30:04originally said over Twitter that this
30:07was an eight billion dollar accounting
30:10mistake
30:12so I'll point to two things and first of
30:15all obviously I don't know what anyone
30:17else is thinking here you know I can
30:19only talk about it from what I know from
30:20what I knew
30:22um and a lot of this is reconstructing
30:23it over the last month I've limited
30:25access to data but uh but you know what
30:29it seems like happened is in the middle
30:31of the year
30:32um uh a lot of you know most of the
30:35borrow lending desks in this space blew
30:37out or closed down and
30:40um it seems like Alameda had you know
30:42margin positions opened with them and
30:45that it likely moved a bunch of that
30:48over to FTX uh this year when they shut
30:51down and that means you know I I think
30:53it was over collateralized
30:56um positions
30:57um but positions that involve
30:58substantial size and substantial US
31:00dollar size on the borrow side uh in
31:05terms of the accounting mistake
31:07um again looking through what happened
31:10um I think that there is a substantial
31:12discrepancy between what the financials
31:15were what the auditing financials were
31:16the true financials
31:18um what the exchange understood all of
31:19that was was consistent
31:22um versus what the dashboards that we
31:24had displayed
31:26um for uh for alameda's account there
31:31um which substantially under displayed
31:33the size of that position and so uh
31:35that's one of the reasons that I was uh
31:37surprised when we dug into everything at
31:40how big that position had become but but
31:42you would agree that there is a much
31:45more closely connected
31:48um version of FTX International and
31:53Alameda than previously understood
31:56fair to say hi yeah I mean given the
31:58size of the position I think it was uh
32:01if not in intention it was in effect uh
32:05tied together substantially more than I
32:07would have ever wanted it to be
32:10so
32:12you did an interview earlier this summer
32:14with Bloomberg and you were asked about
32:15the connection between Alameda and FTX
32:18and you said uh that obviously came from
32:20the the same place because that's it
32:22started that way
32:24um and the same original people but most
32:27of the remaining nexuses you said have
32:29dropped off
32:30I know the people from Alameda decently
32:33well almost as if you don't know what's
32:35happening there and there isn't like a
32:37large amount you know of ways remain
32:39that we are actively working together
32:41anything like that Alameda is a wholly
32:43separate entity they're different
32:45offices like different principal offices
32:48we don't have any shared Personnel we're
32:50also not the same company we not all are
32:53under the same corporate umbrella or
32:54anything like that and yet it seems
32:56like Alameda people were living in the
32:59same Penthouse where you may very well
33:01be right now all together
33:05um I most of Alameda was not uh was not
33:09there uh I I don't live there now but uh
33:12or you know not there now I have not uh
33:14lived there uh for most of the time but
33:16you know I did live with with uh one or
33:20two members of Alameda for a little
33:22while
33:23um and I'll also say that you know as I
33:26was you know earlier this summer looking
33:28at the relationship and this is a pretty
33:32big mistaken oversight of mine I was
33:34viewing it primarily from the trading
33:36volume perspective because that's what
33:38drives our revenue and so when I was
33:40looking at how intertwined are FTX and
33:42Alameda you know I was looking at well
33:44what fraction of trading volume what
33:46fraction of liquidity on the platform
33:48does Alameda represent that had fallen
33:50off from something like 45 in 2019 to
33:53something like two percent this year but
33:56in terms of positions and balances it
33:58was a much larger fraction I hadn't been
34:01looking at that that's a pretty big but
34:03Sam I think the question is whether you
34:04we're supposed to have access
34:07to these accounts to begin with you know
34:09if if I worked at a bank and was a bank
34:12teller and I decided to leave the bank
34:15at the end of the evening and take the
34:16cash that I O sensibly had access to
34:19even if I intended to bring it back to
34:21the bank later even with more money to
34:24give them back I still stole the money
34:28I mean look I wasn't running Alameda I
34:31didn't know exactly what was going on I
34:34didn't know the size of their position
34:37um uh a lot of these are things I've
34:39learned over the last month that I
34:41learned as I was sort of frantically
34:43digging into this on you know November 6
34:45November 7th November 8th
34:48um uh and and uh obviously that that's a
34:53pretty big mistake on Mark that's a
34:54pretty big oversight that I wasn't more
34:57aware
34:58um I think I was you know scared of
35:01um I was nervous because of the conflict
35:03of interest about being too involved
35:07um and uh obviously that shouldn't have
35:09meant that I didn't have real oversight
35:14um or that I really shouldn't have meant
35:16that I failed to appoint anyone to be in
35:19charge of that oversight that
35:20relationship
35:21um but I I haven't been running Alameda
35:24I haven't been you know thinking about
35:26its finances I haven't been you know
35:29making uh those decisions uh uh but you
35:34know as CEO of FTX it was still my duty
35:36to make sure
35:39I was I was a large owner of it that is
35:42true and uh uh and I had a lot of
35:45exposure on that side
35:48um
35:49have you been focused on it if in fact
35:52that's actually where the profits were
35:54well I don't know that that's where I
35:57mean I think Alameda had made trading
35:59profits over the last few years but FTS
36:00have made profits as well
36:02um FTX had been a you know profitable
36:05growing business
36:06um and I was that was more than a
36:09full-time job I didn't have the
36:11bandwidth to run two companies at once I
36:14have the you know attention for it
36:18um and and again I was nervous about a
36:20conflict of interest between those two
36:21and so it was pretty intentional about
36:23not being uh very involved in what was
36:27happening at Alameda when did the
36:29co-mingling of assets begin
36:32so uh and again you know lots of Traders
36:37had open margin positions on FTX where
36:39they would have borrows of of us that's
36:41where they would be short some asset
36:42against uh you know against other assets
36:45as collateral
36:46um that being said I again looking
36:49through this now
36:51um I think that that position size for
36:53Alameda got substantially larger over
36:56the course of uh 2022 and that it was I
37:00think substantially larger by October of
37:022022
37:04um you know probably by July of 22 then
37:06it had been in April but it sounds like
37:09it's fair to say that there was always a
37:11connection between Alameda and FTX and
37:13and almost I mean not almost but from
37:15the very very beginning and then it
37:17never really stopped
37:19well I think it had been in some ways
37:22reducing I mean when you scroll back to
37:242019 alumin FTX were very connected in a
37:28number of ways
37:29um you know one of these it was that
37:31Alameda was the primary liquidity
37:33fighter on FTX it was you know 40
37:35something percent of volume it was the
37:37backstop liquid heat Fighter
37:39um and you know you scroll forward to
37:412022 it was down to two percent of
37:44volume uh we had a lot of backs off
37:46liquidity providers
37:48um uh but it still had a big margin
37:50position on and I
37:53I was failing to pay nearly enough
37:56attention to positions and positional
37:59risk on the exchange and two Alamedas in
38:03particular
38:04um and I also frankly made a mistake
38:07that I feel pretty embarrassed to have
38:10made
38:11um and a lot of these are but I
38:14substantially underestimate what the
38:15scale of market crash could look like
38:16and what the speed of it could look like
38:19but and how correlated it would be but
38:21just that just suggests that you were
38:22just hoping perhaps hoping against hope
38:25that this would all work out and that
38:27nobody therefore would realize what this
38:29co-mingling was all about
38:32so
38:34it's not how I viewed it and in
38:37particular again
38:39most of the firms had margin positions
38:41most of the firms had boroughs on FTX
38:44the problem here this one was this was
38:47too big it was I was surprised by the
38:50size it's not too big it's it's assets
38:52that look it sounds like there were
38:54assets that may have been allowable to
38:57be loaned
38:58but then there were assets that weren't
39:00allowable to be loan no
39:03so
39:05uh I'm still looking into the details of
39:08some pieces of this but
39:10I do think that
39:11um in addition to
39:14um what I had seen as sort of a lot of
39:16the standard boroughs here that
39:19um
39:20we scroll back to 2018
39:23uh or to 2019 I guess
39:26um
39:27FTX didn't have bank accounts it didn't
39:29have any bank accounts globally
39:31we were trying to get them
39:33um
39:34it took us a while took us a few years
39:37um and
39:39you know there are customers who wanted
39:40to wire money to FTX
39:42and so I think in the meantime
39:45um some of them were wiring money to
39:46Alameda research to get credited on FTX
39:50and uh I think that was a substantial
39:53sum uh and I think that the ftx's
39:57internal accounting did correctly
39:59effectively try to debit Alameda
40:02for those funds but it didn't happen in
40:05the primary account and so it didn't
40:07happen it you know it created a
40:09discrepancy between the display of the
40:12account and what was really going on
40:14there and
40:16um I and I'm still looking into exactly
40:18how that how that worked mechanically
40:21but I that that did make that position
40:24size substantially larger than than I
40:26thought and and I think then what you
40:27would have gotten from uh from boost to
40:30normal Avenues what do you make of the
40:33argument that
40:34Alameda was used to effectively wash
40:37money into FTX that American investors
40:42who by the way were not technically
40:43allowed to even invest on FTX were doing
40:46so
40:47and FTX was doing it knowingly
40:50because the the know your customer rules
40:53were being flouted by using this
40:56separate vehicle
40:59uh
41:01uh how would that allow customers to
41:04flood to know your customer uh rules I I
41:09are you talking about people who are
41:10trading on FTX us or are you talking
41:14about customers of FTX International
41:15International you just said that there
41:17was money being sent to Alameda and that
41:19Alameda was then providing credits onto
41:22FTX right but those users still had to
41:24go through to know your customer policy
41:25on FTS in order to do that in order to
41:28use that rant customers still had to go
41:30through ftx's normal kyc onboarding
41:34so when do you think you knew there was
41:37a problem
41:39so
41:41um
41:42uh the time that I really knew there was
41:45a problem was November 6th um November
41:506th was uh that was the date that the uh
41:54you know tweet about ftt came out and
41:58I
42:00by late on November 6th we were putting
42:03together all of the data putting
42:05together all the information that
42:07obviously I should have
42:09put together
42:11way earlier that obviously should have
42:12been part of the dashboards I was always
42:14looking at and
42:17um I you know when we looked at that
42:22um
42:23there was a potential serious problem
42:25there and I you know alameda's pitching
42:29was big on FTX it had just taken a huge
42:33hit
42:34um it had taken hits over the course of
42:36the year but that was a particularly you
42:37know large and and one and very abrupt
42:41um and we're seeing a run on the bank
42:44start and that was leading to
42:47um I you know four billion dollars a day
42:49of client withdrawals
42:50um at that point you know we started
42:52calling prospective you know sources of
42:54financing because I was I was nervous
42:58about what was going to happen there
43:00um you know if you rewind even a few
43:03days
43:04um I was I was a little bit nervous but
43:07not on nearly the same scale and I I was
43:09thinking about uh you know risks that
43:12were substantially less uh did you say
43:15you were nervous you were nervous the
43:16company was going to go under you were
43:17nervous you were going to get caught
43:18what were you nervous about
43:20I on on like on November 6th or before
43:24then
43:26either either so I think before then
43:29what I was nervous about was that
43:31basically
43:32um I
43:34and this started I would say November
43:362nd or so when there was uh you know
43:40Alameda balance sheet um you know
43:42through coindesk and
43:44um and when I started uh to
43:48to think uh a bit more about this
43:52um you know I was nervous that that
43:54would lead to
43:56uh substantial losses for Alameda
43:59um and that uh you know it would be a
44:03bit messy I didn't think it was
44:04existential for FTS I didn't think it
44:06was going to lead to a you know massive
44:09loss for ftx's customers
44:11um I was thinking of this as
44:14um more like Alameda is going to be
44:16really tight on funds and uh uh and that
44:23you know maybe it would end up having
44:25some small impact on FTX but not not a
44:27significant one not one that hurt
44:29customers at all
44:31um uh when you're talking about November
44:336 late November 6th then and and
44:37especially as we bleed into November 7th
44:39and 8th I start to become nervous that
44:41FTX is not going to be able to fill
44:43customer withdrawals and you know by by
44:46late November 6th I am very nervous
44:49about that and I'm starting to think
44:51about like uh emergency scenarios and
44:55I'm starting to think about like things
44:57you might uh
44:59things might end quite badly here and
45:02and and the core metric that I'm
45:04thinking of there is will we be able to
45:06make sure all customers are whole and
45:09you know uh on November 5th I was
45:12feeling
45:13quite good about that on uh November 7th
45:17I was feeling quite uneasy about that
45:19I want to go back in time for a moment
45:21um this summer you were described uh
45:25oftentimes as the JP Morgan of crypto
45:28referencing the 1907 Panic that he
45:30helped prevent
45:33and you had purchased block Phi we're
45:37making investments in uh Voyager and all
45:40sorts of other things
45:41when you were doing that at that time
45:43how much of that was an effort to prop
45:47up
45:48the value of things like ftt which was
45:51the token of FTX
45:53knowing that if a company like block fi
45:57which owned a ton of it
46:01um
46:01that if it if it collapsed ftt would
46:05collapse
46:06and in large part the quote-unquote
46:09collateral that you had for Alameda
46:11would collapse
46:13so uh I don't think any of the borrowed
46:16lending deaths to my knowledge owned a
46:18lot of ftt I think a lot of them you
46:21know may have been using it as collat or
46:23you know taking it as collateral I don't
46:25think they owned it though
46:27um or we're gonna sell it and I think
46:30that most of them ended up closing down
46:32uh effectively all of their lines with
46:35Alameda one way or another and so at
46:38that point I think that that was close
46:40to uh at some cost and
46:43um and so I wasn't viewing it as having
46:44any any impact on ftt in particular
46:48um uh I did view it as important for the
46:50industry's health I did view it as a
46:52thing where uh I wanted to try to keep
46:56the industry stable
46:58um but I don't think it had any you know
47:00really large ftt specific impact and did
47:03it have it you didn't think it had any
47:04impact it would have had no impact on
47:06Alameda or FTX if for example block 5
47:10were to have failed
47:11I I don't think it would have had large
47:13direct impact and the reason I say that
47:15is that I believe that Alameda ended up
47:17returning the vast majority of its open
47:20you know borrowers of its marching
47:21positions with the bar lending desks in
47:23the middle of this year anyway and so at
47:26that point there wasn't that much left
47:28to to save from that
47:30um uh you know the uh at that point I
47:34think the bigger thing was just not
47:36wanting the industry to implode
47:39let's talk about collateral
47:41um because I think this is this entire
47:43experience has been a revelation for a
47:44lot of people about uh what might be
47:47collateral and clearly you were using uh
47:50ftt
47:52um and Solana and other tokens uh as
47:55collateral and part of that required you
47:57to mark them in a specific way a value
48:00to them
48:02um yep
48:03do you think that you were marking them
48:05properly
48:07ah
48:09in elmy's case I don't think I was
48:11marking them uh the way I wish I had
48:14from a risk perspective and I want to
48:18sort of differentiate your like expected
48:20value or or sort of like Worth or
48:23something like that from security and uh
48:27you know I think that uh I don't have
48:31any strong statements to make about you
48:33know what value they're assigned from
48:34sort of like you know a upside
48:36perspective or even a median case
48:39perspective
48:40um but clearly I was uh I was
48:45not nearly cautious enough from a
48:48downside perspective from an extreme
48:50downside perspective and
48:53um you know I can tell you in my head
48:56I was looking at a 30 down move over a
48:59few day period as a sort of like extreme
49:02tail case event that you know we had
49:05seen once before
49:07um and uh
49:10and then you know what happened here was
49:12a I mean a 95 down move over the course
49:16of a year
49:18um and a you know 60 down move over a
49:20few day period with very little
49:22liquidity and all happening at once in
49:25all of these coins in a correlated
49:27fashion in which Hedges didn't mean as
49:30much also because this was a specific
49:32crash on assets associated with Alameda
49:35research rather than all assets and so
49:39you know even correlated Hedges had
49:41limited use there
49:43um and to run on the bank at the same
49:45time and all that are things in
49:47retrospect I should have expected might
49:49happen in an extreme scenario because
49:52that's how markets work and you know
49:55we've seen other examples of that in
49:56history where
49:58when things get really bad they get
50:01really bad for all of the relevant
50:03things at once in a very direct and
50:05correlated and quick way I want to go
50:08back to the blackfy uh acquisition for a
50:11moment how much money do you think
50:12Alameda I'd say that they had a lot of
50:14[ __ ] but that Alameda had borrowed from
50:17block five at the time of the bailout
50:21ah I honestly don't know but I I would
50:24have guessed it's like 100 million maybe
50:27a couple hundred million but I I
50:28honestly don't know the answer that it
50:30wasn't I wasn't like where I am it
50:33wasn't paying detail attention that's my
50:34guess and and were you using ftt and
50:37serum and other things to collateralize
50:39the loans at block five do you think I
50:40mean this goes to the whole idea of both
50:43the value of these things and also
50:45whether you were trying to buy block fi
50:47in fact to continue to support
50:49effectively Alameda or FTX right you
50:52know it might be
50:54um I I would guess it was but but you
50:56know to your point my guess is that like
50:58the amount paid for for Block fry was
51:01probably bigger than the amount that
51:04Alameda had open with it I mean I I
51:06don't know that for sure again I I uh
51:09but I wasn't even looking at what that
51:11number was really but I think that's
51:13that's about right I want to go back to
51:15the Alameda piece of it for just another
51:17moment if you
51:18if you'd stick with me here you told
51:21investors and Regulators that you were
51:23not involved in Alameda decision making
51:25and yet in the case Alameda invested
51:291.15 billion dollars in Genesis Digital
51:31assets
51:33um without your consultation or approval
51:35that that's the question and my
51:37understanding is you also served on the
51:39board of Genesis Digital assets and so
51:43I'm trying to understand how you
51:44wouldn't have been involved with Alameda
51:47so I was somewhat involved with uh
51:50Venture investing and that was done out
51:52of a separate entity
51:54um than you know any of alameda's
51:56proprietary trading uh than its activity
51:59on FTX or other crypto exchanges
52:02um uh but I was uh consulted on uh on
52:06some of its its VC Investments including
52:09with GDA
52:13what what are your lawyers telling you
52:15right now
52:17are they suggesting this is a good idea
52:19for you to be speaking
52:22they are very much not
52:24um uh and uh I mean you know the classic
52:27advice right don't say anything uh you
52:30know recede into a whole uh and that's
52:34not who I am I mean it's not who I want
52:36to be I don't have
52:38I I think I have a duty to talk to
52:40people I have a duty to explain what
52:42happened and I think I have a duty to do
52:44everything I can to try and do what's
52:46right if there is anything I can do to
52:48to try and help customers out here and
52:52uh I don't see what good is accomplished
52:54by me just sitting locked uh you know
52:58you know in a room pretending the
53:00outside world doesn't exist you're in
53:03the Bahamas right now are you in the
53:04Bahamas because you think you can't
53:06leave
53:07uh no I'm I'm in the Bahamas I know I I
53:10have been in in the Bahamas for the last
53:12year and you know I've been running FTX
53:15from the Bahamas you know been running
53:17FTX digital Market our you know primary
53:19operating entity down here
53:21um you know with with you know Bahamian
53:23uh regulators and uh you know others in
53:27in in in contact and uh you know right
53:31now I'm you know I'm looking to be
53:34helpful anywhere I can with any of the
53:35global entities that uh you know that
53:38would want my help do you think you
53:40could come to the United States or go
53:42elsewhere
53:43i i i to my knowledge I could
53:47have you thought about doing that
53:49I I've thought about it and
53:53um you know I mean I mean I've seen a
53:56lot of the uh obviously all the hearings
53:58that have been happening I you know
54:00would not be surprised if you know
54:02sometime I am you know up there talking
54:05about what happened to our
54:07Representatives or
54:09um you know where for else is is most
54:11appropriate How concerned are you about
54:13criminal liability at this point
54:15so I don't think that I mean obviously I
54:18don't I don't personally think that I
54:19have uh you know
54:22but
54:23I I think the real answer is that's not
54:26it sounds weird to say but but I think
54:29the real answer is that's not what I'm
54:30focusing on
54:32um it's uh there's gonna be a time and a
54:36place for me to
54:37sort of think about
54:40myself and my own future but I don't
54:43think this is it like
54:46right now I mean look I I've had a bad
54:49month
54:50um this has not been funny for me but
54:52that's not what matters here like what
54:55matters here is the millions of
54:58customers what matters here is all the
55:01stakeholders in FTX uh who who got hurt
55:04and and trying to do everything I can to
55:07help them out and
55:09you know as long as that's the case like
55:12I don't think that I don't think that
55:15you know what happens with me is the
55:17important part of that and I don't think
55:19that's what it makes sense for me to be
55:21focusing on Sam help me with this
55:23um on November 7th you tweeted and then
55:26deleted a tweet that said quote FTX has
55:29enough to cover all client Holdings we
55:31don't invest client assets even
55:33treasuries we've been processing all
55:35withdrawals and will continue to be
55:38unquote you then deleted that tweet
55:41and literally just moments ago you told
55:43me it was on November 7th
55:46that things took a turn
55:48yep
55:50um you're telling the truth
55:52so things were changing fast and you
55:57know when you look at at November 6th I
56:01was feeling nervous but I felt like
56:03things were probably going to end up
56:05okay we still had I mean you know assets
56:07way larger than liabilities and
56:10um uh and yet there's increasing
56:12withdrawalt man but we were meeting all
56:14of it we were processing all of it
56:15although it was a weekend so we were a
56:18day delayed on a lot of wire transfers
56:20and stable coin creations and Bitcoin
56:22node was overloaded but you know there
56:24are assets who are continuing to process
56:25by November 8th
56:28um I
56:30did not think the odds were that high
56:33that we were going to be able to meet
56:35all client demand and I was worried that
56:38there was going to be a substantial
56:39liquidity shortfall November 7th that
56:41was sort of the transition day and you
56:43know even just to start versus the end
56:45of November 7th I felt I felt fairly
56:47different
56:48um you know and uh I can't remember
56:51exactly who I was thinking or or or when
56:53I sent that but you know I remember
56:55trying to think about feeling conflicted
56:57about what to say and trying to think
56:59about what I could say that I believed
57:00and
57:02um you know by by not that long later I
57:04no longer believed that I no longer that
57:07no longer felt like it had much like
57:10that was a a at all reasonable
57:12representation of where my mind was at
57:15and I don't remember exactly when I
57:17deleted but I remember at some point I
57:19was like I shouldn't be there let me ask
57:20you a different question because this is
57:21all around the same time the New York
57:23Times reported uh that uh 515 million
57:26dollars was suspiciously in quote trans
57:28uh transferred from FTX wallets after
57:30after yeah the bankruptcy filing yeah
57:34and there have been accusations that
57:35this is the assistance effectively of
57:39theft
57:40where did that money go
57:42so uh I will caveat this by saying at
57:45that point
57:46I was being cut off from systems and so
57:48I'll I'll give you the answer to the
57:50extent that I know it
57:52um which is that I believe that a few
57:55different things happened within a short
57:57period there
57:59um I think that uh the uh us team took
58:03actions to seize some of the assets and
58:06put it in custody
58:08um from The Exchange I believe that the
58:11um I it has been announced that
58:15um you know the Bahamian uh Regulators
58:18um took some of the assets into
58:20safekeeping as well
58:22um around that same time
58:24um and I think they're made in addition
58:27to both of those also been uh some
58:30actually improper access uh of assets on
58:34the exchange and I don't know the
58:36details of that I don't have uh the
58:38resources to trace through exactly what
58:41happened there
58:42um and I don't know who is behind that
58:44third part
58:45I want to go back to one thing about the
58:47Bahamas the payment authorities have now
58:50admitted effectively that they ordered
58:51the transfer it sounds like a certain
58:53FTS FTX assets to while it's under the
58:56control after uh the U.S bankruptcy was
58:59filed did you help them with that did
59:02you discuss that with them
59:05so I I you know can't discuss specifics
59:08but I will note that prior to chapter 11
59:11having been filed
59:13um the uh Bohemian authorities had
59:16placed uh FTX digital markets uh the
59:19Bohemian entity which is the primary
59:21operating entity of FTX International
59:24um under supervision of a um a JPL
59:28system in the Bahamas with oversight
59:31from the Securities Commission of the
59:32Bahamas and you know were to my
59:35knowledge taking actions to protect
59:38fdm's uh you know clients
59:41um and and customers there
59:44can we just go back for just one second
59:46I and I apologize for for belaboring
59:49this point but we were talking about FTX
59:51and the derivative piece of it earlier
59:54um and I had made a note earlier about
59:55this uh because you had told the Senate
59:59so you were sitting in the standard at
1:00:00the time on February 9th
1:00:022022 during a hearing you said quote on
1:00:05FTX U.S derivatives uh all of these
1:00:09contracts are fully collateralized
1:00:12was that true
1:00:13yes and again fgx us to my knowledge
1:00:16totally solve an FTX us derivatives
1:00:19totally solvent and in fact I believe
1:00:21FTX us derivatives Ledger X may even be
1:00:24up and running right now I'm confused
1:00:27why ftic us is not processing customer
1:00:30withdrawals right now I would think it
1:00:32should be because I believe to my
1:00:34knowledge that it could be and could
1:00:35make all Americans 100 whole from this
1:00:38so I and and ftxus derivatives as I said
1:00:41there doesn't even allow leverage of any
1:00:43sort
1:00:45um it was you know close to a spot
1:00:46trading platform
1:00:48um and so uh yeah to my knowledge All
1:00:51American customers and All-American
1:00:54regulated businesses and exchanges here
1:00:56are
1:00:57um uh I think uh at least in terms of
1:01:00client assets are are are okay obviously
1:01:03I don't know what's happened with you
1:01:04know you can make your own judgments
1:01:05about the Enterprise value of those
1:01:07businesses but
1:01:08um over the summer you paid a 2.5
1:01:10billion dollar loan to Barry silbert's
1:01:12Genesis this was in August
1:01:14and I was just trying to think through
1:01:16the Dynamics of what might have been
1:01:17happening at your firm and was wondering
1:01:19where did the money come from
1:01:21so when I say you did that I presumed
1:01:23that that's Alameda research that did
1:01:25that is that right yeah that's the case
1:01:27so uh I don't have all of the details
1:01:31there but uh my understanding is that
1:01:34and I don't know exactly what's going on
1:01:36on genesis's side then I I don't know
1:01:38now
1:01:39um but
1:01:40um my understanding is I believe Genesis
1:01:43tried to call in a large number of loans
1:01:46uh from Alameda
1:01:48um I believe that that happened and uh
1:01:52that that closed down a lot of positions
1:01:54that Alameda had opened with Genesis and
1:01:56other trading desks and
1:02:00um I you know that was what I was
1:02:02thinking at the time
1:02:03um and that's I think what what happened
1:02:06there
1:02:07um I also think that may have led to an
1:02:09increase of position size of Alameda on
1:02:11FTX in retrospection
1:02:13um
1:02:15you you did an interview I think perhaps
1:02:17inadvertently uh over Twitter DMS uh
1:02:21with a reporter at Vox
1:02:23and had spoken about ESG
1:02:27but also about what you described as the
1:02:30shibboles
1:02:31of what it meant to look good in
1:02:34Corporate America today
1:02:36um and that a lot of the things that you
1:02:38were doing were not necessarily things
1:02:40you actually believed or believed in
1:02:43can you speak to that
1:02:45yeah absolutely and I was a
1:02:49a frustrating experience was not meant
1:02:50to be a a public interview it was a long
1:02:52time friend of mine who I stupidly uh
1:02:57forgot was also a reporter uh I thought
1:03:00I was speaking in a personal capacity
1:03:02um I I'm not sure what they thought the
1:03:05capacity was at the time but it
1:03:07certainly ended up uh being reported on
1:03:10um and you know I think what I'd say is
1:03:12look
1:03:14um I there are a lot of things I think
1:03:17have really massive impact on the world
1:03:19and
1:03:20ultimately that's what I care about the
1:03:21most and I mean I think that I think
1:03:24frankly that that you know the
1:03:26blockchain industry could you could have
1:03:28substantial positive impact but you know
1:03:30I I was thinking a lot about you know
1:03:33bed nets and Larry about you know saving
1:03:35people from diseases no one should die
1:03:37from
1:03:38um about animals or about pandemic
1:03:40prevention and you know what could be
1:03:42done on large scale to help mitigate
1:03:45those those things I think matter and
1:03:47and and they're you know among the most
1:03:49important things to me
1:03:51um separately from that
1:03:54there's a bunch of [ __ ] that
1:03:56regulated companies do
1:03:59um to try and look good and
1:04:03um these are things that you know
1:04:05everyone who does them basically knows
1:04:07they're kind of dumb that these are not
1:04:10things that are making large impact on
1:04:12the world these are not looking at
1:04:14saving thousands of lives you know these
1:04:17are the kind of like uh you know if uh
1:04:20if like three different quarterbacks
1:04:22throw a touchdown in the same game for
1:04:24the same team we'll donate two used cars
1:04:27to charity uh type campaigns where it's
1:04:29not going to happen it's never happened
1:04:31there's no expectation of a car getting
1:04:33donated it's just a PR campaign sort of
1:04:35masquerading as
1:04:38um as do gooderism and you know things
1:04:41like green washing are are things which
1:04:43I think end up in independent in a
1:04:45similar area fair to say you
1:04:47participated in this
1:04:48yeah we all did and and I I I and you
1:04:51know FTX did as well and there are
1:04:53things I felt like we needed to do for
1:04:55the business there are things that I
1:04:57felt like were were crucial for us being
1:05:00able I mean
1:05:02I I wish the world didn't work this way
1:05:04I wish that these weren't relevant to
1:05:07your ability to get regulated to your
1:05:09ability to
1:05:11um uh get bank accounts but they they
1:05:13were and uh yeah you know we had
1:05:16promotional campaigns we had
1:05:18um you know marketing slogans and uh and
1:05:22you know we thought about what we could
1:05:24do to
1:05:25and you know we thought of ourselves as
1:05:27legitimately trying to do good but we
1:05:30also thought about what we could do uh
1:05:33to uh make sure that our image
1:05:37um reflected that and
1:05:39um there's a lot of a lot of just
1:05:43unimpactful things there that ultimately
1:05:45I I think in some circles got more
1:05:48attention than actually impactful things
1:05:52um and
1:05:53you know I I think that on the more
1:05:55tasteful end of the spectrum you can see
1:05:57you know things like uh small scale but
1:06:00real charitable initiatives
1:06:03um and on I think the less tasteful end
1:06:05of the spectrum you know Frankly
1:06:07Speaking I mean I think even things like
1:06:09you know making sure that
1:06:12um all materials have perfect English
1:06:14grammar is a thing where I that was
1:06:19important Sam let me ask you about this
1:06:21though because the other piece of it is
1:06:23um
1:06:25using using your your money and
1:06:27influence and I think there's a question
1:06:28about whose money you were using uh but
1:06:31to donate for example to the Democratic
1:06:33party
1:06:34um in large part to influence regulation
1:06:39and I think as people have looked
1:06:41through now some of the regulation you
1:06:43were pushing for at cepheus for example
1:06:46some of that regulation would have
1:06:48allowed you frankly to quote
1:06:50self-certify a lot of what was going on
1:06:53at FTX and there are people who look at
1:06:56that and say he was all part of a scheme
1:07:01so I mean unpacking pieces of that when
1:07:03you look at like this the cftc
1:07:05regulation there
1:07:07um ultimately there may have been an
1:07:08ability to self-certify contracts but
1:07:10prior to that we went through a
1:07:14congressional hearing
1:07:16a uh um a public comment period a public
1:07:21Roundtable a year of inquiries and tens
1:07:26of thousands of hours
1:07:29um you know thousands of pages of
1:07:31submitted documents
1:07:33um and still had not uh gotten to the
1:07:36point of having a license to offer
1:07:38emerging Futures in the United States
1:07:40and so it was an extraordinarily long
1:07:44and hard process that we were going
1:07:46through with the cftc
1:07:48um and I you know it was by far the most
1:07:53intensive regulatory
1:07:56processed can you speak to the lobbying
1:07:58piece of it though yeah and the
1:07:59donations piece of it because I think
1:08:01that's that's become part of the story
1:08:03as to whether you effectively were
1:08:05influencing lawmakers to do your bidding
1:08:08and given the state of your current
1:08:12company questions about whether that
1:08:15should be the case
1:08:17so I mean lawmakers were not ruling on
1:08:21FTS FTX didn't have an application
1:08:24before Congress for anything
1:08:27um you know my donations were I mostly
1:08:30for pandemic prevention and they were
1:08:32looking at primary elections where there
1:08:35were candidates who were outspoken in
1:08:37favor of doing things now to prevent the
1:08:39next pandemic that was the primary thing
1:08:41that I was supporting uh with those
1:08:43contributions and you know it was on
1:08:46both sides of of the aisle primarily
1:08:48operating in both primaries because it
1:08:50wasn't I wasn't viewing it as a partisan
1:08:52exercise there is not you know mooses
1:08:55was not looking at donating to one party
1:08:57to beat the other one in the general
1:08:59elections here
1:09:01um uh you know it was not only was it on
1:09:04both sides but even within each side it
1:09:06was between two candidates in the same
1:09:08party and and he was looking at pandemic
1:09:10policy where did the money come from for
1:09:12those donations
1:09:13so I you know basically uh profits I
1:09:17mean uh you know it was uh substantially
1:09:21smaller than the you know amount of
1:09:23trading profits that Alameda had made uh
1:09:25over the prior a few years
1:09:29um related uh to this uh you had a
1:09:31meeting with Garrett Gensler you also
1:09:33met with uh folks uh at cepheus do you
1:09:37think you needed to buy your way into
1:09:38those meetings
1:09:41I mean I don't think I need to buy my
1:09:44way into them I do think it was harder
1:09:45than I would have thought it would be to
1:09:48get to the point of being even able to
1:09:50have meetings with some regulators and I
1:09:52mean I spent uh hundreds of hours
1:09:56um probably thousands of hours in DC
1:09:58trying to get to the point where uh I
1:10:01could even have meetings with with you
1:10:04know some of the relevant Regulators
1:10:06um but that was not a that wasn't the
1:10:09money thing and I mean there's no
1:10:12donations to Gary gensler's he doesn't
1:10:14even have a campaign to donate to in the
1:10:16first place
1:10:17um that was like elbow grease I mean
1:10:20that was just asking again and again and
1:10:22again to have meetings with relevant
1:10:24regulators and
1:10:26um you know submitting hundreds and
1:10:28thousands of pages of documents
1:10:30you also made big Investments uh in a
1:10:33number of media companies and I think
1:10:35that's raised a lot of questions about
1:10:37whether you were trying to buy influence
1:10:39can you speak to that
1:10:41I mean I think Media Matters a lot and I
1:10:43want to support good Media Ventures that
1:10:45was the whole thesis there and I you
1:10:49know I don't have like governance over
1:10:51any of these I wasn't looking for
1:10:54governance over them
1:10:56um I I was looking to support
1:10:58journalists doing great work because I
1:11:00think what they do is really important
1:11:02and I think that there needs to be a
1:11:04critical eye
1:11:06um on stories
1:11:08um uh I'm certainly seeing you know
1:11:11being on the the uh
1:11:14uh on the getting the brunt of a lot of
1:11:16that right now and
1:11:19um you know frankly I think it's healthy
1:11:21um for the world that there is real
1:11:23investigative journalism
1:11:25um your parents are law professors
1:11:28what did you tell them when all of this
1:11:30happened
1:11:32uh I mean I don't remember exactly when
1:11:35I reached out to them but you know I
1:11:37think I I called them up and said hey
1:11:39guys I think there might be a problem
1:11:41like
1:11:42things
1:11:44um uh
1:11:46looks like almie's position might be uh
1:11:50imploded here and uh there might be
1:11:52liquidity issues and I'll tell you more
1:11:55when I know more that that is that's my
1:11:57guess about roughly roughly what I said
1:11:59but honestly that that week so much
1:12:01happened it's a little bit of a blurb me
1:12:04exactly what what are they telling you
1:12:06now
1:12:08and look it's been it's been a hard
1:12:11period for anyone who was close to me
1:12:15and
1:12:16none of them deserved that and I feel
1:12:19really
1:12:20I mean look like
1:12:23a lot of obviously
1:12:25the the largest number of people who are
1:12:28here were were customers and I feel
1:12:30incredibly bad about that
1:12:32um
1:12:33but uh
1:12:35anyone who is close to me you know
1:12:38including my parents including employees
1:12:41co-workers who who you know fought with
1:12:44the company to to push forward
1:12:46were hurt by this and or no
1:12:50responsibility for that
1:12:52um I feel really bad about that and I
1:12:55mean I feel really grateful for the
1:12:57support that my parents are still giving
1:12:58me you know throughout all of this
1:13:01can you explain the real estate piece of
1:13:03this to us I think there's been a number
1:13:05of headlines as you know about FTX the
1:13:08company buying a lot of real estate up
1:13:10in the Bahamas
1:13:12um where you lived at least at the time
1:13:14was owned by the company but then
1:13:16there's also reports uh that your
1:13:19parents
1:13:20signed and were effectively provided
1:13:23with what seemed like a vacation home
1:13:26so I don't know the details of the that
1:13:29house
1:13:30um for for my parents but I knew that it
1:13:33was not intended to be their long-term
1:13:35property I always intend to be the
1:13:36company's property I I don't know how
1:13:39that was papered in and I think that was
1:13:41where it was was and will end up
1:13:45um I I think they may have stayed there
1:13:48while working uh you know with the
1:13:51company uh sometime over the last year
1:13:52when you look at the rest of it
1:13:55um there were a lot of property
1:13:57purchases in the Bahamas uh you know the
1:13:59reason for that is we had you know a
1:14:02hundred uh you know basically 100
1:14:04Silicon Valley uh you know top Silicon
1:14:06Valley employees come down here to work
1:14:07for FTX and
1:14:09um you know we were trying to uh
1:14:11incentivize That Into You Know make sure
1:14:13that they had an easy way to find a
1:14:16comfortable life
1:14:17um so that they'd be willing to move and
1:14:20um and help build out the product and so
1:14:21I you know those hundred people uh put
1:14:25together here um did end up you know uh
1:14:28buying a substantial amount of property
1:14:31and I feel kind of I feel bad about some
1:14:34of uh how those Investments may turn out
1:14:36for them
1:14:38can you just speak to the idea of this
1:14:40company that at least from the public
1:14:42perspective seemed like a
1:14:46um regulated company or something that
1:14:49was uh very focused on compliance you
1:14:52would go to Washington you'd talk about
1:14:54compliance you talk about trust crypto
1:14:56ultimately is actually about trust it's
1:14:59about not having to trust others frankly
1:15:01it's supposed to be a trust list system
1:15:03that's why you trust every trusted so
1:15:05much supposedly
1:15:07um
1:15:08yeah but but it seems like when you read
1:15:10the stories
1:15:12it sounds like a a bunch of kids uh who
1:15:17were on Adderall having a sleepover
1:15:19party
1:15:21um I mean look
1:15:24I screwed up like
1:15:27I'm a CEO I I was a CEO of FTX and I
1:15:32mean
1:15:33I'd say this again and again that
1:15:36that means I had a responsibility that
1:15:37means that I was responsible ultimately
1:15:39frustrated things and I mean I we didn't
1:15:42like
1:15:45we messed up big but there were people
1:15:47though who were telling you you needed
1:15:48more compliance no
1:15:50there were but I I think that compliance
1:15:55um
1:15:56we were spending an enormous amount of
1:15:58our energy on compliance we were
1:15:59spending an enormous amount of energy on
1:16:01regulation on licensure
1:16:03um we're getting licensed in dozens of
1:16:04jurisdictions
1:16:06um uh I think frankly we're spending
1:16:09probably too much of our energy getting
1:16:11licensed in retrospect
1:16:14um and uh you know there were some
1:16:17places where I think that the reporting
1:16:20and transparency obligations from that
1:16:22licensure actually did help I think when
1:16:25you look at I mean FTX U.S derivatives I
1:16:27think when you look at FTX Japan which I
1:16:30think is fully solvent which I think
1:16:32could make all customers whole tomorrow
1:16:34if it were
1:16:36um uh you know the sort of uh relevant
1:16:40teams were to allow it to
1:16:42um I am confused why it hasn't
1:16:45um but
1:16:46um I but you know I think that a lot of
1:16:50what we ended up doing and focusing on
1:16:53was a distraction to some extent from
1:16:57one unbelievably important area that we
1:17:01completely failed on and that was risk
1:17:04that was risk management that was you
1:17:07know customer position risk
1:17:10um uh and you know frankly conflict of
1:17:12interest risk and
1:17:14um you know there
1:17:17there was no person who was chiefly in
1:17:21charge of
1:17:22positional risk of customers on FTX and
1:17:26that feels pretty embarrassing in
1:17:28retrospect because
1:17:30that was and you you go back to 2019
1:17:32even 2018 asked me why am I starting to
1:17:35build out FTX what's the point of it and
1:17:38what I would have said was look the
1:17:40existing crypto derivatives exchanges
1:17:43have large risk management failures that
1:17:45every day they're millions of dollars
1:17:47that are being lost by customers because
1:17:49of risk management failures that these
1:17:52contracts are paying out 75 cents on the
1:17:54dollar week after week after week
1:17:56because of risk management blowouts and
1:18:00that that needs to be overhauled and
1:18:03that was what I was focused on
1:18:06um for the beginning of FTX I was not
1:18:09focused on that for the last year or two
1:18:10I got less grounded from that and I
1:18:13started focusing on the bigger picture
1:18:16on
1:18:18um you know future business Avenues on
1:18:21on licensure on on a lot of things and I
1:18:25mean we we lost track of a really
1:18:27important part of the business and of
1:18:29the product
1:18:31um and so they're absolutely poor
1:18:33management failures huge management
1:18:34failures I bear responsibility for that
1:18:36there were oversight failures
1:18:37transparency failures reporting like so
1:18:40many things we should have had in place
1:18:42I think that a lot of it was on the risk
1:18:44management side let me ask you about
1:18:46that which is we had Larry Fink here
1:18:48today and he had a stake in FTX
1:18:51um and Sequoia and Paradigm and some
1:18:53very big Venture Capital firms had had
1:18:56given you money and I'm curious if they
1:18:58ever asked you
1:19:00questions about this risk management
1:19:04and whether they bear any responsibility
1:19:06for what Clearly Now appears that you're
1:19:08saying was at minimum a lack of
1:19:10oversight if not something much worse
1:19:13um
1:19:14I don't think they bear responsibility I
1:19:16mean like when you look at you put your
1:19:19size you put yourself in the eyes of an
1:19:22investor of a venture capital firm
1:19:25um
1:19:27what you're thinking about primarily
1:19:30is upside
1:19:31right what you're thinking about
1:19:32primarily is investing in a private
1:19:35company and thinking might this 3x might
1:19:38this 5x might this even 10x
1:19:40on the upside cases and yeah there's
1:19:42some chance that it will go down there's
1:19:44some chance that maybe it will go down
1:19:46to zero
1:19:47um but that's counterbalanced by the
1:19:49upside propositions here and and so most
1:19:53of what they were focused on was you
1:19:56know I I think like what might FTS
1:19:59become what's the pathway to get from
1:20:01here to there
1:20:02you know what would it take what are the
1:20:05missing pieces
1:20:07um you know rather than you know at the
1:20:09point where you're dwelling on all of
1:20:11the various precise downside scenarios
1:20:13and risks for a prospective Venture
1:20:16investment that means you're not
1:20:17investing like if that's where your
1:20:19head's at you know if you think the odds
1:20:22are that that's where things are going
1:20:23to end up why why would you do that
1:20:24investment can I ask you about the drugs
1:20:27um you you have tweeted about it
1:20:29Caroline has tweeted about others have
1:20:30tweeted about uppers and downers
1:20:33um and all sorts of things there have
1:20:36been pictures taken of something called
1:20:37msam uh which apparently increases
1:20:40levels of dopamine to the brain it's
1:20:42actually for Parkinson's were you taking
1:20:44that it's a patch
1:20:46so I I it's it's funny hearing this I I
1:20:50had my first sip of alcohol after my
1:20:5221st birthday and I think I I have maybe
1:20:55half a glass of uh of alcohol a year
1:20:58roughly speaking there were no wild
1:21:01parties here when we had parties we'd
1:21:03play board games and you know 20 of
1:21:07people would have three quarters of a
1:21:08beer each or something like that
1:21:11um and you know the rest of us would
1:21:13would not drink anything I see you know
1:21:15any legal drug use around me you know at
1:21:18the office at these parties like and and
1:21:20anyway I mean like you know having
1:21:23people over for dinner is what that
1:21:25meant
1:21:26um I and look I can't talk about anyone
1:21:29else like you know what they're
1:21:30prescribed between themselves and their
1:21:32their doctors their psychiatrists
1:21:34um I can say for me
1:21:37um I don't know like I uh I've been
1:21:40prescribed very things at various times
1:21:42to help with focus and concentration
1:21:44um I and I think they have done that I
1:21:48haven't felt any of
1:21:51um you know the sort of impact that I
1:21:53think people have been theorizing here
1:21:56from it and it's not a huge impact you
1:21:59know in the first place anyway I think
1:22:01you know these have all just been
1:22:03totally on uh on label use of uh of
1:22:08medications and
1:22:10um you know I think things that on the
1:22:11margin helped me focus a little bit
1:22:14um I wish I had been a lot more focused
1:22:16over last year
1:22:18um I may have been unfocused in this
1:22:20last moment because I actually wanted to
1:22:21follow up on the question when we're
1:22:23talking about Venture capitalists
1:22:25um Sequoia and Paradigm invested in you
1:22:29but there have now been questions about
1:22:31the fact that you invested in them
1:22:34and whether these were what some people
1:22:36describe in the business round-trip
1:22:37deals can you speak to that
1:22:40I I mean I think well after they had
1:22:43invested
1:22:45um in FTX I I don't know the details but
1:22:48I think
1:22:49um there may have been a small
1:22:50investment
1:22:52um into some of their funds I think you
1:22:54know with something that we did because
1:22:56I would believe in what they're doing it
1:22:58seemed like a a good opportunity and
1:23:01um didn't think too much about it
1:23:07I'm curious just on a very personal
1:23:08level
1:23:10um because we're close to ending this
1:23:11conversation
1:23:14to the degree that there's been a lesson
1:23:15in this and uh that what you see as your
1:23:19future at this point
1:23:21um I know you're you're taking it day to
1:23:23day obviously
1:23:25um
1:23:27and I know you're an optimist as well uh
1:23:30we've talked about that
1:23:33but what do you think realistically is
1:23:35your future
1:23:38so
1:23:39what is my future
1:23:41um I don't know what my far future is
1:23:43and you know when you fast forward I
1:23:46have no idea what I'm going to be doing
1:23:47you know a long time from now
1:23:50I think when I look at you know what the
1:23:53near and medium term
1:23:54what am I thinking what I'm thinking is
1:23:57and again I don't know what's going to
1:23:58happen
1:23:59um and Olaf is not my hands at this
1:24:01point
1:24:03um but
1:24:05I uh I want to be helpful wherever I can
1:24:08to Regulators administrators you know
1:24:11internationally for working to uh you
1:24:15know to help ftx's customers and I want
1:24:18to be helpful wherever I can on anything
1:24:21that could help bring a lot more value
1:24:22to those customers and you know I don't
1:24:26know where that will lead I can say that
1:24:29prior to filing
1:24:31um there have been a lot of interest in
1:24:35um in financing a lot of Fairly strong
1:24:38interest you know billions of many
1:24:40billions of dollars worth
1:24:42um I don't uh uh I can't make any
1:24:46promises about anything but
1:24:48um uh I I would have thought that there
1:24:51would be you know a chance for a pathway
1:24:54forward here that would bring more value
1:24:57to customers than what would happen if
1:24:59you just sort of sold everything else
1:25:01for uh you know for scraps and
1:25:05um I don't have confidence I I can't
1:25:08promise you and you know I can't promise
1:25:09anyone anything there and it's not
1:25:11really in my hands uh to a large extent
1:25:13but
1:25:15um but I would think that it would make
1:25:17sense to be exploring that because
1:25:19I I think there's a chance that
1:25:22customers could end up made a lot more
1:25:25whole I don't know maybe even fully
1:25:27whole
1:25:28um if there was a really strong
1:25:30concerned effort how would that happen
1:25:34so you know there have been you know
1:25:36there have been examples of this before
1:25:37in crypto history where that happened
1:25:40um obviously you can look at what
1:25:41happened with bitfinex um back a number
1:25:43of years ago
1:25:44um where it got hacked and then ended up
1:25:47making over a few year period customers
1:25:49whole
1:25:50um there are a lot of assets that are on
1:25:53hand here although many of them are not
1:25:55liquid
1:25:57um uh they were worth quite a bit more
1:25:59than the you know needed liabilities a
1:26:02month ago even a lot of them a year ago
1:26:04uh you know there is at least a month
1:26:07ago there were you know or or I guess
1:26:10you know three weeks ago billions of
1:26:11dollars of
1:26:12uh potential funding opportunities
1:26:16um you know I don't know that it would
1:26:18have been great for my uh State as a
1:26:21shareholder of FTX but that's not what
1:26:24matters here and I think it would have
1:26:27brought more financing to customers you
1:26:28saw obviously you know the Tron facility
1:26:30which is open for a little while on FTS
1:26:33which allowed some customers to get
1:26:36liquidity
1:26:38um and I you know you put some of these
1:26:41together
1:26:43um uh you know there's obviously you
1:26:45know actually in the business
1:26:47um where's that lead I don't know
1:26:49exactly and and again it's not going to
1:26:51be my you know decision to make at the
1:26:54end of the day but
1:26:56um I but I think there's a shot for a
1:26:59real value Sam um we're gonna have to
1:27:01wrap up and a couple of just quick other
1:27:04questions one is given what you know
1:27:06about compliance or the lack of it in
1:27:09this business in this industry I think
1:27:11there are a lot of people who are
1:27:12holding crypto today perhaps on
1:27:14exchanges like binance and other places
1:27:17yep
1:27:18what should they think given what you do
1:27:21know and to the extent that you can tell
1:27:23us the truth
1:27:24about what you know
1:27:27what should they think and and I I
1:27:29presume you're asking what should they
1:27:30think about the safety of their assets
1:27:32going forward and correct yeah
1:27:34so look I don't
1:27:37um I obviously don't know exactly what's
1:27:39going on at other exchanges
1:27:41um I can tell you what I would think as
1:27:43a customer you know if I were a customer
1:27:46here which is
1:27:48um look for the things that I wish FTS
1:27:50had been able to supply
1:27:52um things like you know proof of
1:27:54reserves is helpful
1:27:56um look for as rigorous of that as you
1:27:58can look for regulatory reporting right
1:28:01you look at what the jfsa had in place
1:28:03in Japan
1:28:04um you look at what FTX U.S derivatives
1:28:06had with you know I sort of frequent
1:28:10reporting to Regulators of exactly what
1:28:12you know customer assets balances
1:28:13liabilities distributions are
1:28:17um and uh the governance piece
1:28:20yeah what about the governance because
1:28:22one of the things we have not talked
1:28:23about is you had no board
1:28:25and you had no CFO
1:28:28and that should have been a red flag
1:28:30frankly for all of us
1:28:32so interestingly in some ways we had too
1:28:35many boards we had
1:28:38oh goodness
1:28:39hopefully we're going to get him back uh
1:28:42in just a moment if we can thank you for
1:28:44indulging us we are almost
1:28:47um finished with this with this
1:28:49interview
1:28:50are we going to get him back
1:28:54hang tight just for one second if we
1:28:57could can we try to bring Sam back
1:29:00just to complete this interview
1:29:03thanks everybody for sticking with us we
1:29:05are going to be uh back with Sam bankman
1:29:07freed I believe in just just literally a
1:29:10moment as they connect the feed Sam
1:29:13thank you for coming back yeah um can
1:29:15you hear me we were in the middle of the
1:29:16conversation about no see no no board no
1:29:20CFO and you said something which I think
1:29:22raised a lot of eyebrows here you said
1:29:23you thought you had too many boards
1:29:25yeah
1:29:27um and can you hear me here yep we can
1:29:30all hear you yep cool so we didn't talk
1:29:33about much but there is a board of FTX
1:29:35Japan there's the board of FTX U.S
1:29:37derivatives FPS Australia FTX Singapore
1:29:40um FTX Europe
1:29:42um you know we had I think more than a
1:29:43dozen boards when you look at all of the
1:29:46entities put together
1:29:48um and you know many of these boards had
1:29:50regulatory functions I think
1:29:53um the problem to some extent was okay
1:29:55sure
1:29:57you have all these boards but at the end
1:29:59of the day when push comes to shove
1:30:01who's the person who's in charge of
1:30:03global or or the Border or or or the
1:30:07function that's in charge of you know
1:30:08Global site customer risk management
1:30:10like you know there's a diffusion of
1:30:13responsibility to some extent on that
1:30:15front and you know there needed to be I
1:30:20think a single or small set of entities
1:30:24whether of boards people of responsible
1:30:27parties that were sitting there saying I
1:30:30feel responsible for what happens on FTX
1:30:34and I you know we had uh we had actually
1:30:38you know audited financials
1:30:40um I you know from the FTX finances
1:30:43perspective we had infrastructure but
1:30:46from the customer risk and finances
1:30:49perspective much less Sam uh how much
1:30:52money do you have left at this point
1:30:54uh I mean
1:30:56I to my knowledge like
1:31:00close to nothing I mean I believe that
1:31:02everything was just in the companies
1:31:04I mean it's you can put away some money
1:31:07somewhere
1:31:09no no I I don't have any you know hidden
1:31:11funds here um everything I have I'm I'm
1:31:13you know disclosing and
1:31:16um you know I'm I'm down to uh I think I
1:31:19have one working credit card left I
1:31:20didn't get I think it might be a hundred
1:31:22thousand dollars or something like that
1:31:25um in in that bank account
1:31:27um uh and uh I mean I you know
1:31:32everything that I had uh even all the
1:31:35loans I had were those you know those
1:31:38are all things I was reinvesting in in
1:31:40the businesses that I I'd put everything
1:31:42I had into FTX
1:31:45I want to answer two final questions
1:31:48were you truthful with us today
1:31:51I I is as truthful as as I as you know
1:31:56I'm knowledgeable to be there's there's
1:31:58some things I wish I knew more about but
1:32:00yes I was so let me ask you this do you
1:32:02agree that
1:32:03over time you also lied
1:32:07I believe to I agree that I lied
1:32:11I don't know of times when I lied I
1:32:14think
1:32:15look there are certainly times when I
1:32:17was acting as a
1:32:20um as a representative as a marketer for
1:32:23FTX and when I was looking for uh how
1:32:27can I you know in a way which is
1:32:30truthful uh but you know paint FTX as
1:32:34you know compelling away as possible as
1:32:37exciting and optimistic a way as
1:32:40possible and uh you know I wasn't
1:32:44thinking about I wasn't talking about
1:32:45what are the risks involved with FTX you
1:32:49know there
1:32:50um I obviously wish that I'd spent more
1:32:53time dwelling on the downsides and less
1:32:55time thinking about the upsize
1:32:57Sam Eggman freed I want to thank you for
1:33:00this interview I hope that some of the
1:33:03answers uh have been uh
1:33:06helpful as we've tried to understand and
1:33:08untangle what is a still Tangled story
1:33:11um Sam I know that this has been a
1:33:13difficult conversation
1:33:16um and a tough conversation and on
1:33:18behalf of everybody here and on behalf
1:33:20of the public I want to thank you for
1:33:21engaging in it at a time in truth when I
1:33:24know you've been advised not to so thank
1:33:25you so very very much
1:33:27um thank you
1:33:30[Applause]

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