‘We Got Overconfident And Careless’: Sam Bankman-Fried Reveals What Went Wrong With FTX

‘We Got Overconfident And Careless’: Sam Bankman-Fried Reveals What Went Wrong With FTX

Former FTX CEO Sam Bankman-Fried remarked that he grew “overconfident and careless” ahead of the sudden implosion of his cryptocurrency empire.

FTX filed for bankruptcy on Friday after customers discovered that firms controlled by Bankman-Fried and his associates were allegedly fraudulently intertwined, triggering a liquidity crisis as customers hurried to withdraw funds. A number of individual users and institutional clients still have as much as $8 billion remaining with the company.

Bankman-Fried, whose $15 billion net worth evaporated almost overnight, commented on Tuesday and Wednesday via social media that his present goal is to “do right by customers.” The young entrepreneur, who is presently located in the Bahamas, said he is “meeting in-person with regulators and working with the teams to do what we can for customers” before he shifted his focus to investors.

Alameda Research, a trading firm launched by Bankman-Fried and led by Caroline Ellison, with whom he had been romantically intertwined, allegedly borrowed customer holdings from FTX to make trades, according to a report from CNBC. Bankman-Fried admitted that “there was too much leverage,” more than he “realized” as his company handled roughly $10 billion in volume per day, meaning that “a run on the bank and marked crash exhausted liquidity.”

Bankman-Fried affirmed that he is devoted to raising liquidity from investors, who have reportedly been hesitant to direct more funds toward the bankrupt company. “Maybe I’ll fail. Maybe I won’t get anything more for customers than what’s already there,” he continued. “I’ve certainly failed before. You all know that now, all too well. But all I can do is to try. I’ve failed enough for the month. And part of me thinks I might get somewhere.”

Referencing his coverage from the media as a cryptocurrency wunderkind, some of which continued even after FTX declared bankruptcy, Bankman-Fried claimed that his team was once “held as paragons of running an effective company.” Nevertheless, being featured “on the cover of every magazine” and becoming the “darling” of Silicon Valley caused him to grow “overconfident and careless.”

Beyond ample attention from media outlets, Bankman-Fried solicited a number of celebrities as brand ambassadors and shareholders, including Tampa Bay Buccaneers quarterback Tom Brady and supermodel Gisele Bündchen, Golden State Warriors player Steph Curry, Jacksonville Jaguars quarterback Trevor Lawrence, basketball legend Shaquille O’Neal, celebrity investor Kevin O’Leary, retired baseball player David Ortiz, and tennis star Naomi Osaka. A number of celebrity partners were partially compensated in cryptocurrency, although it is not clear whether their assets are presently frozen in accounts managed by FTX.

Officials in the United States and the Bahamas are reportedly working to transport Bankman-Fried out of the island nation as regulators seek to address the crisis. Members of the House Financial Services Committee will hold hearings on the situation next month, during which they intend to hear from Bankman-Fried and others involved in related entities, including competitor Binance, which nearly purchased FTX.

“Oversight is one of Congress’ most critical functions and we must get to the bottom of this for FTX’s customers and the American people,” Rep. Patrick McHenry (R-NC) said in a press release. “It’s essential that we hold bad actors accountable so responsible players can harness technology to build a more inclusive financial system.”

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