Sam Bankman-Fried, the once-celebrated crypto entrepreneur whose empire now faces bankruptcy, said Wednesday at his first public appearance since he stepped down as CEO of FTX that he did not “try to commit fraud on anyone.”
Bankman-Fried, appearing at the New York Times DealBook Summit, insisted in an interview with CNBC anchor Andrew Ross Sorkin over a video call that he was "shocked" by his firm's collapse.
"I was excited about FTX a month ago. ... I was shocked by what happened,” Bankman-Fried said, adding, "I substantially underestimated what the scale of the market crash could look like and the speed of it."
A growing number of regulators are investigating Bankman-Fried and his former company, and the fallout from the collapse of FTX is only expanding.
The company’s new CEO, John Ray III, said in bankruptcy filings that in his 40-year career, he had never seen “such a complete failure of corporate controls and such a complete absence of trustworthy financial information.” Ray is expected to testify before the House Financial Services Committee on Dec. 13.
The broader industry consequences also continue to play out, with the crypto firm BlockFi filing for bankruptcy last week. And on Wednesday one of the world's largest crypto exchanges, Kraken, announced it was laying off 1,100 workers, nearly a third of its staff.
Several other speakers at the event also nodded to the fallout.
BlackRock CEO Larry Fink acknowledged that his company had invested $24 million in FTX and predicted that many crypto companies would not be around for much longer.
Bankman-Fried, 30, was flying high in the months before his crypto exchange abruptly imploded. FTX signed a licensing deal with a major U.S. sports arena and ran a star-studded Super Bowl ad last winter. And as the market became increasingly volatile, driving investors out of the market and forcing major industry players to shutter their operations, he took on the mantle of the industry’s “white knight,” folding insolvent firms into his sprawling empire.
But the crypto king’s vast empire came tumbling down when the crypto trade publication CoinDesk published an article raising concerns about the solvency of Bankman-Fried’s businesses on Nov. 2.
At the heart of the report was a leaked balance sheet from FTX’s sister company, Alameda Research, which showed the firm’s financial backing consisted primarily of FTX’s self-minted FTT token — a digital asset that, like many cryptocurrencies, is prone to price fluctuations.
Days after the CoinDesk report, FTX rival Binance announced it would sell its FTX holdings, setting off a bank-run-style rush of withdrawals. Just over a week later, FTX filed for Chapter 11 bankruptcy protection after it failed to raise emergency capital necessary to return users’ funds and keep operating.