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Transcript of Sam Bankman-Fried’s Interview at the DealBook Summit

ANDREW ROSS SORKIN: In the span of about one week, Sam Bankman-Fried went from a billionaire — the white knight of the crypto world, and running one of the largest exchanges — to what some people think has become a wanted man. FTX was once valued at $32 billion. It’s now effectively worthless in bankruptcy. We’re going to talk about that and whether investors will ever get money back.

There are multiple billions owed to creditors and big questions in the wake of the collapse. Bitcoin fell to its lowest price in two years, and on Monday, BlockFi, which had been bailed out by FTX, filed for bankruptcy. The rapid fall of this empire has left so many questions about crypto, about the future of it, and whether it can be trusted again.

Sam Bankman-Fried joins us right now live from the Bahamas.

Sam, I want to thank you for joining us this afternoon. I appreciate your willingness to have this conversation. As I said at the outset of today, there are a lot of questions that need to be asked and also need to be answered. As you know, a lot of people have been hurt, genuinely hurt. And my hope is that over the time we have together that we can have a candid conversation about what happened — how it happened. There are people who are angry, and they are seeking answers.

I just want everyone in the audience to know that I received thousands of letters and emails, even in the past couple days, from a lot of these people who feel like they’re victims. And some of them have questioned whether we should have this conversation, whether we should have this interview. There are people don’t believe that this conversation should happen. I just want to say that I think our job as journalists is to have those conversations — is to ask those questions and seek those answers on behalf of the public. And that is especially true right now.

Sam, here’s where I want to start the conversation, if we could.

I think at this point, there are two ways to view what has happened at FTX. I know we will get into all of the details in a moment, but I’m just going to go very basic.

There is a generous view. And the generous view is that you are a young man who made a series of terrible, terrible, very, very bad decisions.

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The less generous view is that you have committed a massive fraud. That this is a Ponzi scheme, a manipulation of the system.

And I want to start there, because I think there are so many people who have that question, which is, What is this? And what did happen?

SAM BANKMAN-FRIED: Thanks for having me. At the end of the day, I was C.E.O. of FTX, and that means whatever happened, why ever it happened — I had a duty. I had a duty to all of our stakeholders, to our customers, our creditors. I had a duty to our employees, to our investors and to the regulators of the world to do right by them and make sure the right things happened at the company. And clearly, I did not do a good job with that.

Clearly I made a lot of mistakes. There are things I would give anything to be able to do over again. I did not ever try to commit fraud on anyone. I was excited about the prospects of FTX a month ago. I saw it as a thriving, growing business. I was shocked by what happened this month. And reconstructing it, were there things I wish I had done differently.

SORKIN: Let’s talk about some of the things you would want to have done differently.

But I don’t want this to be an abstraction for folks. It’s a lot of big numbers and often doesn’t feel human.

One of the letters I got, I want to read to you, Sam. Because it’s from a gentleman who said he lost his life savings. And the subject line is “Sam Bankman-Fried stole $2 million from me.”

He says: “Andrew, can you please ask S.B.F. why he decided to steal my life savings and the $10 billion more from customers to give to his hedge fund, Alameda? Can you ask him why his hedge fund was leveraging long all of these S coins?” I’m going to keep it polite for the kids. “Please ask him if he thinks what happened was fraud.”

These are the kinds of letters that I’ve been getting repeatedly over the past several days.

What do you tell this — this man?

BANKMAN-FRIED: I am deeply sorry about what happened. The long and short of what happened — I will start by saying, just to make a distinction here — you look at the U.S. platform, you look at the international platform. The U.S. platform is a U.S.-regulated platform with American users. To my knowledge, that’s fully solvent; that’s fully funded. I believe that withdrawals could be opened up today, and everyone could be made whole from that and none of these problems plague the U.S. platform. Then you look at the international platform for their non-U. S. users.

As the letter says, Alameda Research did have a long position. And the international platform — it’s a margin trade platform, it’s a derivatives platform. It’s a platform where all the clients were going on — placing something as collateral and using that to put on a position, whether that’s a futures position, a spot position, a borrow. And you know what the exchange was storing was the collateral from all of those positions. Alameda Research was one of those that put on positions there. And as I tried to reconstruct this over the last month — I have limited access to data, but my view of it, from what I have been able to see, is roughly that basically, look, a year ago, Alameda had, I think, something like 10 percent leverage, had something like 10 times the assets of the position that it had on. Over the course of the last year, there were a number of market crashes that drove the value of those assets down and the leverage up. I think it was, to my knowledge, still under 2X leverage as of a month ago. You look at what happened this month, and in a few days, all-out P.R. assault, which led to a total market collapse in a pretty short period of time, no bid-side liquidity. I think more than $10 billion wiped off in a matter of days. And realistically speaking, no ability for FTX to be able to liquidate that position and generate everything that was owed.

SORKIN: But I think the bigger question is where Alameda got the loan from, which is to say there is a view that this is about commingling of funds. And in that letter that I just read you, this gentleman actually copied and pasted the terms of service for FTX into the email. I want to read you this.

It says, “None of the digital assets in your account are the property of, or shall or may be loaned to, FTX Trading. FTX Trading does not represent or treat digital assets in users’ accounts as belonging to FTX Trading.” So, how is it possible that Alameda had this loan of such a large size?

BANKMAN-FRIED: So, there is that piece from the terms of service. But there were a number of other parts of the terms of service and a number of other parts of the platform on top of that. There is the borrow/lending facility, where users were lending billions of dollars of assets to each other, collateralized by assets on the exchange. And you had, obviously, futures contracts where there were leveraged positions on. Of course, all of this — it’s meant to be the case that these are positions where FTX could, if it needed to, margin-call those positions and close them down in time, such that it would cover all those shorts, all those liabilities. Obviously that wasn’t the case here, and that’s a massive failure of oversight of risk management and of diffusion of responsibility from myself running FTX.

SORKIN: Make this very straight: Was there commingling of funds? That’s what it appears like. It appears like there’s been a genuine commingling of funds that are of FTX customers that were not supposed to be commingled with your separate firm.

BANKMAN-FRIED: I didn’t knowingly commingle funds. And again, one piece of this, you have the margin trading. You have, you know, customers borrowing from each other. Alameda is one of those. I was frankly surprised by how big Alameda’s position was, which points to another failure of oversight on my part and failure to appoint someone to be chiefly in charge of that. But I wasn’t trying to commingle funds.

SORKIN: Let me ask you this. The Wall Street Journal reported that Carolyn Ellison told Alameda staffers that Alameda used FTX client funds to cover loans that were being recalled because of the Luna-triggered credit crunch. Carolyn says that she, Sam, Gary were aware of this. How do you square that with what you originally said over Twitter — that this was an $8 billion accounting mistake?

BANKMAN-FRIED: So, I will point to two things.

First of all, I obviously don’t know what anyone else is thinking here. I can only talk about it from what I know and from what I knew. A lot of this is reconstructing it over the last month. I have limited access to data. But what it seems like happened is in the middle of the year, a lot of — most of the borrow/lending desks in the space blew out or closed down. And it seems like Alameda had margin positions opened with them, and that it likely moved a bunch of that over to FTX this year when they shut down. And that means — I think it was overcollateralized positions, but positions that involved substantial size and substantial U.S. dollar size on the borrower side. In terms of the accounting mistake, again, looking through what happened, I think that there is a substantial discrepancy between what the financials were, what the auditing financials were, the true financials, what the exchange understood — all of that was consistent — versus what the dashboards that we had displayed for Alameda’s account there, which substantially underdisplayed the size of that position. That’s one of the reasons that I was surprised when we dug into everything — at how big that position had become.

SORKIN: You would agree that there is a much more closely connected version of FTX international and Alameda than previously understood. Fair to say?

BANKMAN-FRIED: Yeah. Given the size of the position, it was, if not an intention, it was in effect tied together substantially more than I would have ever wanted it to be.

SORKIN: You did an interview earlier this summer with Bloomberg, and you were asked about the connection with Alameda and FTX, and you said that obviously it came from the same place, because it started that way and the same original people. But most of the remaining nexuses, you said, have dropped off. “I know the people from Alameda decently well — almost as if you don’t know what’s happening there — “and there isn’t like a large amount, you know, of ways that we are actively working together. Anything like that, Alameda is a wholly separate entity. They are different offices, like different principal offices, we don’t have any shared personnel. We are also not the same company. We not all are under the same corporate umbrella or anything like that.” And yet, it seems like Alameda people were living in the same penthouse where you may very well be right now, all together.

BANKMAN-FRIED: Most of Alameda was not there. I don’t live there now. I have not lived there for most of the time. I did live with — with one or two members of Alameda for a little while. And I’ll also say that as I was — earlier this summer, looking at the relationship, and this is a pretty big mistake and oversight of mine, I was viewing it as primarily from the trading volume perspective, because that is what drives our revenue. And so when I was looking at how intertwined are FTX and Alameda, I was looking at what fraction of trading volume, what fraction of liquidity on the platform does Alameda represent? That had fallen off from something like 45 percent in 2019 to something like 2 percent this year. But in terms of positions and balances, it was a much larger fraction. I hadn’t been looking at that. That’s a pretty big oversight.

SORKIN: I think the question is whether you supposed to have access to these accounts to begin with. If I worked at a bank and was a bank teller and I decided to leave the bank at the end of the evening and take the cash that I ostensibly had access to, even if I intended to bring it back to the bank later or with even more money to give them back — I still stole that money.

BANKMAN-FRIED: Look, I wasn’t running Alameda. I didn’t know exactly what was going on. I didn’t know the size of their position. A lot of these are things I’ve learned over the last month, that I learned as I was sort of frantically sort of digging into this on Nov. 6, Nov. 7, Nov. 8. Obviously, that’s a pretty big mistake and oversight, that I wasn’t more aware. I think I was scared of — I was nervous because of the conflict of interest about being too involved. Obviously that shouldn’t have meant that I didn’t have real oversight. Or that — and it really shouldn’t have meant that I failed to appoint anyone to be in charge of that oversight, that relationship. But I haven’t been running Alameda. I haven’t been thinking about its finances. I haven’t been making those decisions. But as C.E.O. of FTX, it was still my duty to make sure someone was doing diligence.

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SORKIN: But you owned it.

SAM BANKMAN-FRIED: I was a large owner of it. That is true. I had a lot of exposure on that side. But I wasn’t running it.

SORKIN: So why wouldn’t you have been focused on it if that’s actually where the profits were?

BANKMAN-FRIED: Well, I don’t know — I think Alameda made trading profits over the last few years, but FTX had made profits as well. FTX had been a profitable, growing business.

That was more than a full-time job. I didn’t have the bandwidth to run two companies at once. I didn’t have the attention for it. And again, I was nervous about a conflict of interest between those two and so was pretty intentional about not being very involved in what was happening at Alameda.

SORKIN: When did the commingling of assets begin?

BANKMAN-FRIED: Lots of traders had open margin positions on FTX where they would have borrows of assets or they would be short some asset against, you know, against other assets as collateral. That being said, again, looking through this now, I think that that position size for Alameda got substantially larger over the course of 2022 and that it was, I think, substantially larger by October of 2022, probably by July of 2022, than it had been in April.

SORKIN: It sounds like it’s fair to say that there was always a connection between Alameda and FTX. And that almost, well not almost, but from very, very beginning, and it never really stopped.

BANKMAN-FRIED: I think it had been, in some ways, reducing. When you scroll back to 2019, Alameda and FTX were very connected in a number of ways. One of these was that Alameda was the primary liquidity provider on FTX, it was 40-something percent of volume. It was the backstop liquidity provider. You scroll forward to 2022, it was down to 2 percent of volume. We had a lot of backstop liquidity providers. But it still had a big margin position on it. I was failing to pay nearly enough attention to positions and positional risk on the exchange, and to Alameda’s in particular. And I also, frankly, made a mistake that I feel pretty embarrassed to have made. A lot of these are. I substantially underestimated what the scale of market crash could look like and what the speed of it could look like and how correlated it would be.

SORKIN: Does that just suggest that you were just hoping — perhaps hoping against hope — that this would all work out and that nobody, therefore, would realize what this commingling was all about?

BANKMAN-FRIED: It’s not how I viewed it. In particular, again, most of the firms had margin positions. Most of the firms had borrows on FTX. The problem here, this one, was this was too big. I was surprised by the size of what it was.

SORKIN: Not just too big, but its assets — look, it sounds like there were assets that may have been allowable to be loaned, but then there were assets that weren’t allowable to be loaned, no?

BANKMAN-FRIED: I’m still looking into the details of some pieces of this. I do think that in addition to what I had seen is sort of a lot of the standard borrows here — that when you scroll back to 2018 — or 2019, I guess — FTX did not have bank accounts. It didn’t have any bank accounts globally. We were trying to get them. It took us a while — it took us a few years.

There were customers who wanted to wire money to FTX. And so I think in the meantime, some of them were wiring money to Alameda Research to get credited on FTX. And I think that was a substantial sum. And I think that the FTX’s internal accounting did correctly, effectively try to debit Alameda for those funds. But it didn’t happen in the primary account. And so it didn’t happen — it created a discrepancy between the display of the account and what was really going on there. I’m still looking into exactly how that worked mechanically, but that did make that position size substantially larger than I thought and, I think, than what you would’ve gotten from both the normal avenues.

SORKIN: What do you make of the argument that Alameda was used to effectively wash money into FTX? That American investors — who, by the way, were not technically allowed to even invest on FTX — were doing so, and FTX was doing it knowingly, because the know-your-customer rules were being flouted by using this separate vehicle?

BANKMAN-FRIED: How would that allow customers to flout the know-your-customer rules? Are you talking about people who are trading on FTX U.S., or are you talking about customers of FTX international?

SORKIN: International. You just said there was money sent to Alameda and that Alameda was then providing credits onto FTX.

BANKMAN-FRIED: Right. But those users still had to go through the know-your-customer policy on FTX in order to do that. In order to use that ramp, customers still had to go through FTX’s normal K.Y.C. onboarding.

SORKIN: When do you think you knew there was a problem?

BANKMAN-FRIED: The time that I really knew there was a problem was Nov. 6. Nov. 6 was — that was the date that the tweet about FTT came out. By late on Nov. 6, we were putting together all of the data and putting together the information that obviously I should have put together way earlier. That obviously should have been a part of the dashboards I was always looking at. When we looked at that, there was a potential serious problem there. Alameda’s position was big on FTX. It had just taken a huge hit. It had taken hits over the course of the year, but that was a particularly large one and very abrupt. We’re seeing a run on the bank start, and that was leading to $4 billion a day of client withdrawals. At that point, we started calling prospective sources of financing, because I was nervous about what was going to happen there. If you rewind even a few days, I was a little bit nervous, but not on nearly the same scale, and I was thinking about risks that were substantially less.

SORKIN: When you say you were nervous — you were nervous the company was going to go under? You were nervous you were going to get caught? What were you nervous about?

BANKMAN-FRIED: Like on Nov. 6, or before then?

SORKIN: Either.

BANKMAN-FRIED: I think before then, what I was nervous about was that basically, and this started, I would say, Nov. 2 or so, when there was the Alameda balance sheet through CoinDesk — and when I started to think a bit more about this, I was nervous that that would lead to substantial losses for Alameda and that it would be a bit messy. I didn’t think it was existential for FTX. I didn’t think it was going to lead to a massive loss for FTX’s customers.

I was thinking of this as more like, Alameda is going to be really tight on funds. And that maybe it would end up having some small impact on FTX, but not a significant one, not one that hurt customers at all.

When you’re talking about Nov. 6, late Nov. 6 — then, and especially as we bleed into Nov. 7 and 8, I start to become nervous that FTX is not going to be able to fill customer withdrawals. And by late Nov. 6, I am very nervous about that, and I’m starting to think about emergency scenarios. And I’m starting to think about, things might — things might end quite badly here.

The core metric that I’m thinking of there is, will we be able to make sure all customers are whole? And on Nov. 5, I was feeling quite good about that. On Nov. 7, I was feeling quite uneasy about that.

SORKIN: I want to go back in time for a moment. This summer you were described often times as the J.P. Morgan of crypto, referencing the 1907 panic that he helped prevent.

You had purchased BlockFi, were making investments in Voyager and all sorts of other things. When you were doing that at that time, how much of that was an effort to prop up the value of things like FTT, which was the token of FTX, knowing that if a company like BlockFi, which owned a ton of it — that if it collapsed, FTT would collapse, and in large part, the quote-unquote collateral that you had for Alameda would collapse.

BANKMAN-FRIED: I don’t think any of the borrow/lending desks, to my knowledge, owned a lot of FTT. I think a lot of them may have been using it as, or taking it for, collateral. I don’t think they owned it, though, or were going to sell it. And I think that most of them ended up closing down, effectively, all of their lines with Alameda, one way or another.

At that point, that was close to a sunk cost. I wasn’t viewing it as having any impact on FTT in particular. I did view it as important for the industry’s health. I did view it as a thing where I wanted to try to keep the industry stable. But I don’t think it had any really large FTT-specific impact.

SORKIN: You didn't think it had — it would have had no impact on Alameda or FTX if, for example, BlockFi were to have failed?

BANKMAN-FRIED: I don’t think it would have had large direct impact, and the reason I say that is that I believe Alameda ended up returning the vast majority of its open borrows of its margin positions with the borrow/lending desks in the middle of this year anyway. At that point, there wasn’t that much left to save from that. At that point, I think, the bigger thing was just not wanting the industry to implode.

SORKIN: Let’s talk about collateral. Because I think this entire experience has been a revelation for a lot of people about what might be collateral. Clearly you were using FTT, and Solana and other tokens, as collateral, and part of that required you to mark them in a specific way — a value to them. Do you think that you were marking them properly?

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BANKMAN-FRIED: In Alameda’s case, I don’t think I was marking them the way I wish I had, from a risk perspective.

I want to differentiate here expected value or worth, or something like that, from security. I think that I don’t have strong statements to make about what value they are assigned from an upside perspective or even a median-case perspective. But clearly, I was not nearly cautious enough from a downside perspective — from the extreme downside perspective. I can tell you: In my head, I was looking at a 30 percent down move over a few-day period as a sort of extreme tail case event that we had seen once before.

And then what happened here was a 95 percent down move over the course of a year and a 60 percent down move over a few-day period, with very little liquidity and all happening at once in all of these coins in a correlated fashion in which hedges didn’t mean as much, also, because this was a specific crash on assets associated with Alameda Research rather than all assets. Even correlated hedges had limited use there. And a run on the bank at the same time. And all of that are things, in retrospect, I should’ve expected might happen in an extreme scenario because that is how markets work. We’ve seen other examples of that in history, where when things get really bad, they get really bad for all of the relevant things at once in a very direct and correlated and quick way.

SORKIN: I want to go back to the BlockFi acquisition for a moment. How much money do you think Alameda — I’d say that they had a lot of FTT, but that Alameda had borrowed from BlockFi at the time of the bailout?

BANKMAN-FRIED: I honestly don’t know. But I would have guessed 100 million, maybe. A couple hundred million. I honestly don’t know the answer. I wasn’t paying detailed attention. That’s my guess.

SORKIN: And were you using FTT and the Serum and other things to collateralize the loans at BlockFi, do you think? This goes to the whole idea of both the value of these things and also whether you were trying to buy BlockFi, in fact, to continue to support, effectively, Alameda or FTX?

BANKMAN-FRIED: It might be. I would guess it was. But to your point, my guess is that the amount the amount paid for BlockFi was probably bigger than the amount that Alameda had open with it. I don’t know that for sure. But I wasn’t even looking at what that number was, really. But I think that’s about right.

SORKIN: I want to go back to the Alameda piece of it for just another moment, if you’d stick with me here. You had told investors and regulators that you were not involved in Alameda decision-making. And yet, in the case — Alameda invested $1.15 billion in Genesis Digital Assets without your consultation or approval? That’s the question. And my understanding is you also served on the board of Genesis Digital Assets. And so I’m trying to understand how you wouldn’t have been involved with Alameda.

BANKMAN-FRIED: I was somewhat involved with venture investing, and that was done out of a separate entity than any of Alameda’s proprietary trading, than its activity on FTX or other crypto exchanges. But I was consulted on some of its V.C. investments, including with G.D.A.

SORKIN: What are your lawyers telling you right now? Are they suggesting this is a good idea for you to be speaking?

BANKMAN-FRIED: No. They are very much not.

The classic advice, right: Don’t say anything. Recede into a hole.

And that’s not who I am. It’s not who I want to be. I don’t have — I think I have a duty to talk to people. I have a duty to explain what happened. And I think I have a duty to do everything I can to try and do what’s right. If there is anything I can do to try and help customers out here. And I don’t see what good is accomplished by me just sitting locked in a room pretending the outside world doesn’t exist.

SORKIN: You’re in the Bahamas right now. Are you in the Bahamas because you think you can’t leave?

BANKMAN-FRIED: I’m in the Bahamas — I have been in the Bahamas for the last year, and I’ve been running FTX from the Bahamas. I’ve been running FTX Digital Market, our primary operating entity, down here with Bahamian regulators and others in contact. Right now, I am looking to be helpful anywhere I can with any of the global entities that would want my help.

SORKIN: Do you think you could come to the United States or go elsewhere?

BANKMAN-FRIED: To my knowledge, I could.

SORKIN: Have you thought about doing that?

BANKMAN-FRIED: I have thought about it, and I have seen a lot of the hearings that have been happening. I would not be surprised if some time I am up there talking about what happened to our representatives or wherever else is most appropriate.

SORKIN: How concerned are you about criminal liability at this point?

BANKMAN-FRIED: I don’t think that — obviously, I don’t personally think that I have — I think the real answer is it’s not — it sounds weird to say it, but I think the real answer is it’s not what I’m focusing on. It’s — there’s going to be a time and a place for me to think about myself and my own future. But I don’t think this is it.

Right now, look, I've had a bad month. This has not been a fun month for me. But that’s not what matters here. What matters here is the millions of customers. What matters here is all the stakeholders in FTX who got hurt and trying to do everything to help them out. As long as that’s the case, I don’t think that what happens to me is the important part of that, and I don’t think that’s what it makes sense for me to be focusing on.

SORKIN: Sam, help me with this. On Nov. 7, you tweeted, and then deleted a tweet, that said: “FTX has enough to cover all client holdings, we don’t invest client assets, even treasuries. We have been processing all withdrawals and will continue to be.” You then deleted that tweet and literally just moments ago, you told me that it was on Nov. 7 that things took a turn.

BANKMAN-FRIED: Yep.

SORKIN: Were you telling the truth?

BANKMAN-FRIED: Things were changing fast.

When you look at Nov. 6, I was feeling nervous, but I felt like things were probably going to end up OK. We still had — I mean, assets way larger than liabilities. And yeah, there was increasing withdrawal demand, but we were meeting all of it. We were processing all of it. Although it was a weekend, so we were a day delayed on a lot of wire transfers and stablecoin creations, and Bitcoin node was overloaded, but our assets were continuing to process. By Nov. 8, I did not think the odds were that high that we were going to be able to meet all client demand, and I was worried that there was going to be a substantial liquidity shortfall.

Nov. 7 — that was sort of the transition day. Even just the start versus the end of Nov. 7, I felt — I felt fairly different. I can’t remember exactly what I was thinking or when I sent that. But I remember trying to think about — feeling conflicted about what to say and trying to think about what I could say that I believed. By not that long later, I no longer believed that. I no longer — that no longer felt like it had much — like that was a at all reasonable representation of where my mind was at. And I don’t remember exactly when I deleted it, but I remember at some point I was like, “Ah, it shouldn’t be there.”

SORKIN: Let me ask a different question, because this is all around the same time. The New York Times reported that $515 million was “suspiciously,” in quotes, transferred from FTX wallets after — after — the bankruptcy filing. And there been accusations that this is the assistance, effectively, of theft. Where did that money go?

BANKMAN-FRIED: I will caveat this by saying, at that point, I was being cut off from systems.

I will give you the answer to the extent that I know it. Which is that I believe that a few different things happened within a short period there.

I think that the U.S. team took actions to seize some of the assets and put it in custody from the exchange. I believe that it has been announced that the Bahamian regulators took some of the assets into safekeeping as well around that same time. And I think there may — in addition to both of those also been some actually improper access of assets on the exchange. I don’t know the details of that. I don’t have the resources to trace through exactly what happened there. And I don’t know who is behind that third part.

SORKIN: I want to go back to one thing about the Bahamas. The Bahamian authorities there have now admitted, effectively, that they ordered the transfer, it sounds like, of certain FTX assets to wallets under their control after the U.S. bankruptcy was filed. Did you help them with that? Did you discuss that with them?

BANKMAN-FRIED: I can’t discuss specifics, but I will note that prior to Chapter 11 having been filed, the Bahamian authorities had placed FTX Digital Markets — the Bahamian entity, which is the primary operating entity of FTX international — under supervision of a J.P.L. system in the Bahamas with oversight from the Securities Commission of the Bahamas and were, to my knowledge, taking actions to protect F.D.M.’s clients and customers there.

SORKIN: Can we go back for just one second, and I apologize for belaboring this point, but we were talking about FTX and the derivative piece of it earlier. I had made a note earlier about this because you had told the Senate — you were sitting in the Senate at the time, on Feb. 9, 2022, during a hearing you said, quote, “On FTX U.S. derivatives, all of these contracts are fully collateralized.” Was that true?

BANKMAN-FRIED: Yes. And again, FTX U.S., to my knowledge — totally solvent. FTX U.S. derivatives — totally solvent. And in fact, I believe FTX U.S. derivatives — LEDGER X — may even be up and running right now. I’m confused why FTX U.S. is not processing customer withdrawals right now.

I would think it should be, because I believe, to my knowledge, that it could be and could make all Americans 100 percent whole from this. FTX U.S. derivatives, as I said, doesn’t even allow leverage of any sort. It was close to a spot-trading platform. And so, to my knowledge, all American customers and all American-regulated businesses and exchanges here are, I think, at least in terms of client assets, are OK. Obviously, I don’t know what’s happened — you can make your own judgment about the enterprise value of those businesses, but —

SORKIN: Over the summer, you paid a $2.5 billion loan to Barry Silbert’s Genesis — this was in August — and I was just trying to think through the dynamics of what might have been happening at your firm and was wondering, where did the money come from?

BANKMAN-FRIED: So when you say, “You did that,” I presume that that’s Alameda Research that did that? Is that right?

SORKIN: Yes. Yes, that’s the case.

BANKMAN-FRIED: I don’t have all of the details there. My understanding is that, and I don’t know what’s happening on Genesis’s side, and I don’t know now. But my understanding, and I believe that Genesis tried to call in a large number of loans from Alameda. I believe that that happened and that closed down a lot of positions that Alameda opened with Genesis and other trading desks. That is what I was thinking at the time. And I think that’s what happened there. I also think that may have led to an increase of position size at Alameda on FTX in retrospect.

SORKIN: You did an interview, I think perhaps maybe inadvertently, over Twitter DMs with a reporter at Vox and had spoken about E.S.G. and also about what you described as the shibboleths of what it meant to look good in corporate America today, and that a lot of the things that you were doing were not necessarily things you actually believed or believed in. Can you speak to that?

BANKMAN-FRIED: Yeah, absolutely. It was frustrating because that was not meant to be a public interview. It was a longtime friend of mine who I stupidly forgot was also a reporter.

I thought I was speaking in a personal capacity. I am not sure what they thought their capacity was at the time, but it certainly ended up being reported on.

And, you know, I think what I’d say is, look, there are a lot of things that I think have really a massive impact on the world. And ultimately, that’s what I care about the most. And I mean, I think that I think, frankly, that, you know, watching history could, you know, could have substantial positive impact. But, you know, I was thinking a lot about, you know, bed nets and malaria, about saving people from diseases. No one should die from that, and animal welfare and pandemic prevention. And, you know, what could be done on a large scale to help mitigate those.

Those things, I think, matter. And they’re, you know, among the most important things to me. Separately from that, there is a bunch of bullshit that regulated companies do to try and look good. And these are things that everyone who does them basically knows they’re kind of dumb, that these are not things that are making a large impact on the world. These are not looking at saving thousands of lives. You know, these are the kind of like, you know, if like three different quarterbacks throw a touchdown in the same game for the same team, we will donate two used cars to charity-type campaigns. Where it’s not going to happen. It’s never happened. There’s no expectation of a car getting donated. It’s just a P.R. campaign sort of masquerading as a as do-gooderism. And, you know, things like greenwashing are things which I think end up in a similar area.

SORKIN: Fair to say he participated in this?

BANKMAN-FRIED: Yeah, we all did. And FTX did as well. There are things I felt like we needed to do for the business. There are things that I felt like were crucial for us being able — I wish the world did not work this way. I wish that these were not relevant to your ability to get regulated, to your ability to get bank accounts, but they were.

We had promotional campaigns. We had marketing slogans. We thought about ourselves as legitimately trying to do good, but we also thought about what we could do to make sure that our image reflected that. There is a lot of unimpactful things that ultimately, I think, in some circles got more attention than actually impactful things.

On the more tasteful end of the spectrum, you can see things like small-scale but real charitable initiatives. On the less tasteful end of the spectrum and, frankly speaking, things like making sure that all materials have perfect English grammar is a thing where — that was important.

SORKIN: Sam, let me ask you about this because the other piece of it is using your money and influence — and I think there is a question about whose money you were using — to donate, for example, to the Democratic Party, in large part to influence regulation. And I think as people have looked through now, some of the regulation you are pushing for at CFIUS, for example, some of that regulation would’ve allowed you, frankly, to “sort of self-certify” a lot of what was going on at FTX. And there are people who look at that and say it was all part of the scheme.

BANKMAN-FRIED: So, unpacking a piece of that when you look at the C.F.T.C. regulation there, ultimately there may have been an ability to self-certify contracts, but prior to that we went through a congressional hearing, a public comment period, a public roundtable, a year of inquiries and tens of thousands of hours, thousands of pages of submitted documents, and we still did not get to the point of having a license to offer emerging futures in the United States. It was an extraordinarily long process that we were going with the C.F.T.C. And it was by far the most intensive regulatory process that I had ever seen.

SORKIN: Can you speak to the lobbying piece of it and the donations piece of it, though? Because that’s become part of the story. Whether you were effectively influencing lawmakers to do your bidding and, given the state of your current company, questions about whether that should be the case.

BANKMAN-FRIED: Lawmakers were not ruling on FTX. FTX did not have an application before Congress for anything. My donations were mostly for pandemic prevention. They were looking at primary elections where there were candidates who are outspoken in favor of doing things now to prevent the next pandemic. That was a primary thing that I was supporting with those contributions. It was on both sides of the aisle, primarily operating in both primaries because I wasn’t viewing it as a partisan exercise. It was not, you know, this was not looking at donating to one party to beat the other one in the general elections here. You know, not only was it on both sides, but even within each side, it was between two candidates in the same party. And it was looking at pandemic policy.

SORKIN: Where did the money come from for those donations?

BANKMAN-FRIED: Basically, profits. It was substantially smaller than the amount of trading profits that Alameda had made over the prior few years.

SORKIN: Related to this. You had a meeting with Gary Gensler, and you met with folks at CFIUS. Did you think you needed to buy your way into those meetings?

BANKMAN-FRIED: I don’t think I need to buy my way into them. But I do think it was harder than I thought it would be to get to the point of being even able to have meetings with some regulators. I spent hundreds of hours, probably thousands of hours, in D.C. trying to get to the point where I could even have meetings with some of the relevant regulators. That was not a money thing. Gary doesn’t even have a campaign to donate to. That was elbow grease. That was just asking again and again to have meetings with relevant regulators and submitting hundreds of thousands of pages of documents.

SORKIN: You made big investments in a number of media companies. I think that has raised a lot of questions about whether you were you trying to buy influence. Can you speak to that?

BANKMAN-FRIED: Media matters a lot, and I wanted to support good media ventures. That was the whole thesis there. I don’t have governance over any of these. I was not looking for governance over them. I was looking to support journalists doing great work because I think what they do is really important. I think there needs to be a critical eye on stories. I’m certainly seeing — being on the, getting the brunt of a lot of that right now. Frankly, I think it is healthy for the world that there is real investigative journalism.

SORKIN: Your parents are law professors. What did you tell them when all this happens?

BANKMAN-FRIED: I don’t remember exactly when I reached out to them. I think I called them up and said, “Hey guys, I think there might be a problem. Like, it looks like Alameda’s position might be imploding here. There might be liquidity issues. I will tell you more when I know more.”

That is my guess about roughly what I said. Honestly, that week, so much happened that it’s a little bit of a blur.

SORKIN: What are they telling you now?

BANKMAN-FRIED: It’s been a hard period for anyone who was close to me. None of them deserved that. Look, the largest number of people who are hurt here were customers. I feel incredibly bad about that. Anyone who was close to me, including my parents and employees and co-workers, who fought with the company to push forward, were hurt by this. They bore no responsibility for that. I feel really bad about that. I feel really grateful for the support my parents are still giving me throughout all of this.

SORKIN: Can you explain the real estate piece to this for us. There are number of headlines about FTX, the company buying a lot of real estate in the Bahamas. It’s where you lived at the time — it was owned by the company. There also reports that your parents signed and were effectively provided with what seemed like a vacation home.

BANKMAN-FRIED: I don’t know the details of the house for my parents. I know it was not intended to be their long-term property. It was intended to be the company’s property. I don’t know how that was papered in, and I think that’s where it was and will end up.

They may have stayed there while working with the company sometime over the last year.

When you look at the rest of it, there were a lot of property purchases in the Bahamas. The reason for that is that we had a hundred — basically 100 Silicon Valley employees come down here to work for FTX. You know, we were trying to incentivize that and to, you know, make sure that they had an easy way to find a comfortable life that they’d be willing to move and help build out the product. And so I, you know, those 100 people put together here did end up buying a substantial amount of property. And I feel kind of I feel bad about how some of those investments may have turned out for them.

SORKIN: Can you speak to the idea of this company that at least from the public perspective seemed like a regulated company or something that was very focused on compliance. You could go to Washington and talk about compliance. You talk about trust. Crypto ultimately is about trust. It’s about not having to trust others. It’s about a trust-free system. That’s why you’re supposed to trust it so much.

BANKMAN-FRIED: Yes.

SORKIN: But it seems when you read the stories, it sounds like a bunch of kids who were on Adderall having a sleepover party.

BANKMAN-FRIED: Look, I screwed up. I was C.E.O. I was the C.E.O. of FTX. And I say this again and again that it means I had a responsibility, and I was responsible ultimately for us doing the right things and didn’t. We messed up big.

SORKIN: But there were people who were telling you that you needed more compliance, no?

BANKMAN-FRIED: There were, but I think compliance — we were spending an enormous amount of our energy on compliance. We were spending an enormous amount of energy on regulation, on licensure. We were getting licensed in dozens of jurisdictions. I, I think, frankly, we’re spending probably too much of our energy getting licensed in retrospect.

You know, there were some places where I think that the reporting and transparency obligations from that licensure actually did help. I think when you look at I mean, FTX U.S. derivatives. When you look at FTX Japan, which I think is fully solvent, which I think could make all customers whole tomorrow if the teams were to allow it to. I am confused why it hasn’t. But you know, I think that a lot of what we ended up doing and focusing on was a distraction to some extent from one unbelievably important area that we completely failed on. And that was risk. That was risk management. That was customer position risk. And frankly, conflict-of-interest risk. And you know, there, there was no person who was chiefly in charge of positional risk of customers on FTX. And that feels pretty embarrassing in retrospect because that was, you go back to 2019, even 2018, ask me, why am I starting to build out FTX? What’s the point of it?

And what I would have said was, look, existing crypto derivatives exchanges have large risk-management failures, that every day there are millions of dollars that are being lost by customers because of risk-management failures, that these contracts are paying out 75 cents on the dollar week after week after week because of risk-management blowouts and that, that needs to be overhauled. And that was what I was focused on for the beginning of FTX. I was not focused on that for the last year or two. I got less grounded from that, and I started focusing on the bigger picture on, on known future business avenues, on, on licensure, on a lot of things. And I mean we, we lost track of a really important part of the business and of the product. And so there absolutely were management failures, huge management failures. I bear responsibility for that. There were oversight failures, transparency failures, reporting like so many things we should have had in place. I think that a lot of it was on the risk-management side.

SORKIN: Let me ask you about that. We had Larry Fink here today, and he had a stake in FTX. And Sequoia, Paradigm, very big venture capital firms had given you money. I’m curious if they ever asked you questions about this risk management. Whether they bear any responsibility?

BANKMAN-FRIED: I don’t think they bear responsibility. Put yourself in the eyes of an investor, a venture capital firm, what you’re thinking about primarily is upside. What you’re thinking about primarily is investing in a private company and thinking, “Might this 3X, might this 5X, might this even 10X in the upside cases?” And yeah, there’s some chance that it might go down, some chance it will go down to zero, but it’s counterbalanced by the upside propositions here. Most of what they were focused on was, I think, what might FTX become, what’s the pathway to get from here to there. What would it take? What are the missing pieces? At the point where you are dwelling on all of the various precise downside scenarios and risks for a prospective venture investment, that means you are not investing. If that is where your head is at, and you think the odds are that is where you’ll end up, why would you do that investment?

SORKIN: Can I ask you about the drugs? You have tweeted about it, Caroline has tweeted about it. Others have tweeted about uppers and downers and all sorts of things. There have been pictures taken of something called Emsam, which apparently increases levels of dopamine to the brain. It’s actually for Parkinson’s. Were you taking that? It’s a patch.

BANKMAN-FRIED: It’s funny hearing this. I had my first sip of alcohol after my 21st birthday. I think I maybe have half a glass of alcohol a year, roughly speaking. There were no wild parties here. When we had parties were we played board games. Twenty percent of people would have a quarter of a beer each or something like that, and the rest of us would not drink anything. I didn’t see any illegal drug use at the office or at these parties. And when I say parties, I mean having people over for dinner, that’s what that meant.

I can’t talk about anyone else. What they are prescribed is between them and their doctors or psychiatrist. I can say for me, I have been prescribed various things at various times to help with focus and concentration, and I think they have done that. I haven’t felt any of the sort of impact that people have been theorizing from it. And it’s not a huge impact in the first place anyway. I think these have totally been on-label use of medication that I think on the margin help me focus a little bit. I wish I had been a lot more focused over the last year.

SORKIN: I may have been unfocused in this last moment because I actually wanted to follow-up on the question when we are talking about venture capitalist. Sequoia and Paradigm invested in you, but there are now questions about you investing in them. And whether these were what some people call in the business round-trip deals? Can you speak to that?

BANKMAN-FRIED: Well after they had invested in FTX, and I don’t know the details, there may have been a small investment into some of their funds. I think it’s something we may have done because we believed in what they’re doing or seemed like a good opportunity. I didn’t think too much about it.

SORKIN: I’m curious on a personal level, as we get close to ending this conversation, to the degree that there has been a lesson in this and what you see is your future at this point. I know you’re taking it day to day at this point, obviously. And I know you are an optimist as well; we have talked about that. What do you think realistically is your future?

BANKMAN-FRIED: What is my future? I don’t know what my far future is. When you fast-forward, I don’t know what I’ll be doing a long time from now. When I look at the near- and medium-term, what am I thinking? And again, I don’t know what’s going to happen. A lot is not in my hands at this point. I want to be helpful wherever I can to regulators, administrators, internationally, who are working to help FTX’s customers, and I want to be helpful wherever I can on anything that could help bring a lot more value to those customers. I don’t know where that will lead.

I can say that prior to filing, there have been a lot of interest in financing, a lot of fairly strong interest. Billions of dollars worth. I can’t make any promises about anything. I would have thought there would be a chance for a pathway forward here that would bring more value to customers then what would happen if you just sold everything off for scraps. I don’t have confidence. I can’t promise anyone anything, and it’s not really in my hands to a large extent, but I would think it would make sense to be exploring that. I think there is a chance that customers could end up being made a lot more whole or maybe even fully whole if there was a really strong concerted effort.

SORKIN: How would that happen?

BANKMAN-FRIED: There’ve been examples of this before in crypto history where this happened. Obviously, you can look at what happened with Bitfinex back a number of years ago where it got hacked and then ended up making over a few years’ period customers whole. There are a lot of assets that are on hand here, although many of them are not liquid. They were worth quite a bit more than the liabilities a month ago, even, let alone a year ago. There is at least a month ago there were or I guess, you know, three weeks ago, billions of dollars of potential funding opportunities. You know, I don’t know that it would have been great for my stake as a shareholder of FTX, but that’s not what matters here. And I think it would have brought more financing to customers. You saw obviously, you know, the Tron facility, which is open for a little while on FTX, which allowed some customers to get liquidity. And I, you know, you put some of these together. I, you know, there’s obviously equity in the business. Where does that lead? I don’t know exactly. And, and again, it’s not going to be my decision to make at the end of the day. But I, but I think there’s a shot for a real value.

SORKIN: We will have to wrap up. A few quick other questions. One, given what you know about compliance or the lack of it in this business, in this industry, I think there are a lot of people holding crypto today perhaps on exchanges like finance and other places, what should they think given what you do know and to the extent that you can tell us the truth about what you know?

BANKMAN-FRIED: What should they think? And I presume you’re asking what should they think about the safety of their assets going forward. Correct?

SORKIN: Yeah.

BANKMAN-FRIED: So look, I don’t, I obviously don’t know exactly what’s going on at other exchanges. I can tell you what I would think as a customer. You know, if I, if I were a customer here, which is look for the things that I wish FTX had been able to supply. Things like, you know, proof of reserves is helpful. Look for as rigorous of that as you can look for regulatory reporting. Right. You look at what the JFSA had in place in Japan, you look at what the FTX U.S. derivatives had with, you know, I saw frequent reporting to regulators of exactly what customer assets balances, liabilities, distributions are on.

SORKIN: What about the governance piece? The governance piece — one thing we have not talked about — you had no board. You had no C.F.O. That should have been a red flag frankly for all of us.

BANKMAN-FRIED: Interestingly, in some ways we had too many boards.

SORKIN: Oh goodness. Hopefully we can get him back in just a moment — thank you for indulging us. We are almost finished with this interview. Will we get him back? Hang tight for one second. Can we try to bring Sam back just to complete this interview? Thanks everybody for sticking with us. We will be back with Sam Bankman-Fried, I believe in just literally a moment as they connect the feed. Sam, thank you for coming back. We were in the middle of the conversation about no seat, no board, no C.F.O, and I think you said something that raised some eyebrows over here that you had too many boards.

BANKMAN-FRIED: There was a board of FTX Japan, there was a board of FTX U.S. derivatives, FTX Australia, FTX Singapore, FTX Europe. We had more than a dozen boards when you look at all of the entities put together. Many of these boards had regulatory functions. The problem to some extent was OK, sure, you have all these boards, but at the end of the day, when push comes to shove, who was the person in charge of the global or the border or the function that is in charge of customer risk management. There is a diffusion of responsibility to some extent. There needed to be, I think, a single or small set of entities, whether of boards, of people, of responsible parties that were sitting there saying, “I feel responsible for what happens on FTX.” We had audited financials from the FTX finances perspective. We had infrastructure, but from the customer risk and finances perspective, much less.

SORKIN: Sam, how much money do you have left at this point?

BANKMAN-FRIED: I mean, to my, like, knowledge, close to nothing. Everything was in the company.

SORKIN: What does that mean? You didn’t put away some money somewhere?

BANKMAN-FRIED: No. I don’t have any hidden funds here. Everything I have I am disclosing and I am down to — I think I have one working credit card left. I think it might be $100,000 or something like that in that bank account. Everything I had, even all the loans I had — those were all things I was reinvesting in the businesses that I put everything I had into FTX.

SORKIN: Two final questions. Were you truthful with us today?

BANKMAN-FRIED: I was as truthful as I am knowledgeable to be. There are some things I wish I knew more about. But, yes, I was.

SORKIN: Do you agree that over time you also lied?

BANKMAN-FRIED: Do I agree that I lied? I don’t know of times when I lied. Look, there are times when I, certainly times when I was acting as a representative, as a marketer for FTX and when I was looking for how can I — in a way which is truthful — paint FTX in as a compelling way as possible. And as an exciting and optimistic way as possible. I wasn’t thinking about, and I wasn’t talking about what are the risks involved with FTX. I obviously wish that I had spent more time dwelling on the downsides and less time thinking about the upsides.

SORKIN: Sam Bankman-Fried, I want to thank you for this interview, and I hope that some of the answers have been helpful as we tried to understand and untangle a still tangled story. Sam, I know this is been a difficult and tough conversation. On behalf of everyone here and the public, thank you for engaging in a time of truth, when I know you have not been advised not to. Thank you very much.

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 12/1/2022

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