2-hour sit-down with Sam Bankman-Fried on the FTX scandal
The Scoop
Do You Believe You Deserve to Be Punished?
"It doesn't feel good right now. And I reflect on what's happened on the impact that I've had, like that does not feel good," he said. "I think I have the strongest duty I have ever had to anything." He added: "Do you believe anyone who has hurt someone should be punished?"
In this episode of The Scoop, Sam Bankman-Fried describes how a legacy payment system linked FTX’s future to Alameda Research’s fate, and explores why regulators and auditors alike failed to discover this relationship.
According to Bankman-Fried, many FTX customers would fund their accounts via direct wire transfers to Alameda Research bank accounts:
“What that flow I think looked like was basically: Bob wires $100 straight to Alameda Research, and then Alameda effectively ledger transfers $100 to Bob on FTX.”
SBF has claimed that wired customer funds contributed to over half of Alameda’s position on FTX, likely totaling over $5 billion, as reported by the WSJ.
In hindsight, SBF says a “reasonably responsible” way of managing direct wire transfers would have been only debiting Alameda’s primary FTX account. In practice, however, wired customer funds were being credited from an Alameda stub account that SBF says “was specifically meant to be a ledger for wire transfers.”
When pressed on how regulators and auditors failed to uncover the extent of Alameda’s relationship to FTX, SBF alleged that customer positions — including Alameda’s — were not part of FTX’s balance sheet:
“This was effectively a customer negative position, and many customers had negative positions open on FTX… Those were not part of FTX's assets or liabilities, they were customer assets and liabilities, and so FTX's financials were not directly impacted by this.”
Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from founder and former FTX and Alameda CEO Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions.
Episode 121 of Season 4 of The Scoop was recorded remotely with The Block's Frank Chaparro, and Sam Bankman-Fried, Co-Founder of FTX and Alameda Research.
Listen below, and subscribe to The Scoop on Apple, Spotify, Google Podcasts, Stitcher or wherever you listen to podcasts. Email feedback and revision requests can be sent to podcast@theblockcrypto.com.
This episode is brought to you by our sponsors Tron, Ledn, Athletic Greens
About Tron
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