Image Source: Bloomberg
Sam Bankman-Fried, the boss of the collapsed crypto exchange FTX, says he hopes to make enough money to pay back the people who lost money when FTX went down.
The federal government is looking into how the 30-year-old old’s company handled money.
The former billionaire spoke in a luxury complex in the Bahamas. He denied fraud but said he wasn’t nearly as bright as he thought.
He says he worries about being arrested at night when he is “ruminating.”
People could trade regular money for cryptocurrencies like Bitcoin on the FTX crypto exchange.
It was the second biggest in the world, and about $10 billion worth of crypto coins changed hands every day.
But last month, investigators found out that FTX and Mr. Bankman-other Fried’s business, Alameda Research, were unstable financially.
Everything fell apart in eight days, and the company filed for bankruptcy.
More than a million FTX users are locked out of their crypto wallets and can’t get to their money, according to estimates.
Mr. Bankman-Fried invited the BBC to the building where he still lives in the Bahamas. He says he hopes to find a way to pay back FTX users.
When asked if he was going to start a new business to make money to pay back investors, he said “yes.”
How Sam Bankman-Fried got it wrong
Lawyers who deal with bankruptcy have said that the FTX scandal was one of the most sudden and hard business failures in U.S. history. They said that Mr. Bankman-Fried ran the business like it was “his fiefdom.”
The U.S. Senate Banking Committee wants the exchange’s former CEO to talk about what happened at hearings next week. He said on Friday that he would be there.
People say that Mr. Bankman-Alameda Fried’s Research hedge fund made risky financial bets with the money of FTX customers.
A former senior FTX employee who worked with Mr. Bankman-Fried said he thinks the former CEO knew about it.
He said that Mr. Bankman-Fried lied and didn’t know how the companies moved to cash and cryptocurrencies back and forth.
The American has conducted nine lengthy self-critical interviews in the last six days.
Because of “security concerns,” his team says they had to move to a place they don’t know in the luxury resort where he lives.
Reporters have used telescopic lenses to take pictures of him in his apartment from the water. At least two YouTubers can get into the complex without permission to make videos.
Mr. Bankman-Fried is from a wealthy family, but he worries about his money because he can’t get into his bank accounts and has “less than $100,000 left.”
When asked if he was getting ready to be arrested and sent to jail, he said, “Yes. But he added that he tries to stay focused daily, get as much done as possible, and not worry about things he can’t change.
How FTX collapsed
The end of FTX’s reign as “King of Crypto” Sam Bankman-Fried
Early in 2022, FTX was worth $32 billion and a household name. An NBA stadium was named after the company, and famous people like NFL star Tom Brady backed it.
Mr. Bankman-Fried seemingly delighted in showing his Twitter followers an insight into his lifestyle. He usually sleeps on a beanbag next to his office desk, where a picture of him is lying next to his staff at their trading terminals.
In another, he wrote a post in the early morning. “Couldn’t sleep. He wrote, “Back to the office.”
Mr. Bankman-Fried was making good progress toward donating money to charity. In an interview with BBC Radio last month, he said he had already given away “a few hundred million.”
And he wasn’t just kind to people who needed it. The “King of Crypto” has gotten a new name in the last six months: “Crypto’s White Knight.”
The “Crypto Winter” is in full swing in 2022, when the prices of cryptocurrencies go down. So while other companies in the same field were failing, Sam Bankman-Fried gave out hundreds of millions of dollars to save them.
After an article on the CoinDesk website said that much of Mr. Bankman-trading Fried’s giant Alameda Research is built on a coin made by a sister company of FTX and not a separate asset, there were a lot of questions about how stable FTX is financially.
In the Wall Street Journal, there were more claims that Alameda Research used FTX customer deposits as loans to trade.
The final straw
The beginning of the end came, though, when FTX’s main competitor – Binance – publicly sold off all its crypto tokens linked to FTX a few days later.
Changpeng Zhao, the CEO of Binance, told his 7.5 million followers that the company would sell off its holdings “because of recent news.”
Read Also: FTX: Crypto exchange failure calls for regulation
It caused a rush on the cryptocurrency exchange FTX, where people withdrew billions of dollars out of fear.
FTX stopped withdrawals, as Sam Bankman-Fried tried to get a bailout. At one point, Binance publicly thought about buying him out but left.
Binance said that reports of “mishandled customer funds and alleged U.S. agency investigations” had influenced its decision.
The next day, court ruled FTX bankrupt.
In a series of tweets, Mr. Bankman-Fried said he was sorry.