Sam Bankman-Fried, who was once considered the real ”wunderkind” of the crypto world, is desperately trying to defend his public image despite federal law enforcement investigations closing in.
Bloomberg reported Tuesday that the U.S. and the Bahamas may be looking to put FTX founder Bankman-Fried on a plane so he and Uncle Sam can have a little chat about the massive failure of his crypto exchange. According to three unnamed sources familiar with the matter, federal law enforcement has been talking more and more with Bahamian officials about the possibility of extraditing the 30-year-old crypto founder who often goes by SBF, though the island’s authorities have apparently said he is cooperating with them for the time being.
Bloomberg also noted that Bahamian police interviewed SBF on Saturday, but U.S. officials have yet to get in a room with the young once-multi-billionaire. FTX was once valued at $US32 ($44) billion, but since the start of this crypto calamity nearly all those funds have been squandered.
The Department of Justice and the U.S. Attorney’s Office for the Southern District of New York are probing FTX over fraud allegations surrounding its collapse. The U.S. attorney’s office declined to comment. Gizmodo also reached out to the DOJ for comment but we did not immediately hear back.
Notably, the Securities and Exchange Commission is separately investigating the failed crypto exchange over whether it was illegally selling securities in the form of crypto.
Bankman-Fried vacated his position as CEO last week at the same time practically all companies associated with the founder declared bankruptcy. Still, that hasn’t stopped him from trying to maintain that, even if some mistakes were made, “all I can do is try,” as he wrote in a Twitter thread Tuesday night.
Well, moreso he needs to desperately try to scrape together enough cash for customers who collectively lost millions of dollars when the exchange stopped processing withdrawals. At the same time, he seems desperate to show that as far as he knew back on Nov. 7, he had more assets than liabilities on the docket.
12) To the best of my knowledge, as of post-11/7, with the potential for errors:
a) Alameda had more assets than liabilities M2M (but not liquid!)
b) Alameda had margin position on FTX Intl
c) FTX US had enough to repay all customersNot everyone necessarily agrees with this
— SBF (@SBF_FTX) November 15, 2022
“Not everyone necessarily agrees with this,” Bankman-Fried added as a caveat, which may be the biggest understatement in the history of crypto. It also contradicts multiple reports from the Financial Times that said that FTX had less than $US1 ($1) billion in liquid assets and $US9 ($12) billion in liabilities by the end of its run, according to a balance sheet reportedly created by SBF Nov. 10. Most of its other remaining assets were illiquid, meaning they had very little value on the open market.
And just a reminder, On Nov. 7 SBF tweeted that “FTX is fine” and that the exchange had enough to cover all client holdings, adding that they “don’t invest client assets (even in treasuries).” Those tweets have since been deleted. Bankman-Fried has been desperately trying to save his image in interviews, but it seems neither authorities or those whose funds were stolen by his exchange seem ready to let him off the hook.
Reports on FTX’s fallout noted that SBF tried to prop up his high-profile trading firm Alameda research with $US10 ($14) billion in FTX customer funds. A new Wednesday report from Reuters based on company documents and interviews with current and former employees revealed that FTX was being used to benefit Alameda, despite both entities ostensibly being separate. Bankman-Fried had reportedly included the same assets on both FTX and Alameda’s balance sheets, and he was even brash enough to show that fact in presentations to investors. The report even notes that one of SBF’s aids “tweaked” accounting software that allowed him to hide the fact he was transferring customer funds between FTX and Alameda.
So he may want to make customers whole, but that may prove a hard bargain considering that court documents released this week show the number of creditors that FTX owes could be over 1 million.