FTX Founder Hidden in Bahamas "Cannot Explain Tens of Billions Sent to Affiliates"

Founder and former CEO of cryptocurrency exchange FTX, Sam Bankman-Fried
[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Sam Bankman-Fried, the former CEO and founder of the cryptocurrency exchange FTX, which filed for bankruptcy, said he "cannot explain" how billions of dollars of FTX customers' funds were transferred to its affiliate Alameda Research, and admitted he had "almost no insight" into the company's operations.

According to the Wall Street Journal (WSJ) on the 4th (local time), Bankman-Fried made these remarks during an interview with the outlet at his residence in Albany, Bahamas, the day before. In the early days of FTX, the company did not have a bank account, so some FTX customers sent money to Alameda's bank account intending to deposit funds into FTX, but all of these funds have now disappeared.

The total amount of money deposited by FTX customers into Alameda's accounts is estimated to exceed $5 billion (approximately 6.5 trillion KRW).

Bankman-Fried said, "That money was transferred to Alameda, and after that, I can only speculate about what happened." He added, "Dollars are interchangeable. There is no such thing as a $1 bill that you can track from start to finish."

FTX is suspected of having lent customers' funds to its affiliate Alameda without authorization. The FTX collapse began earlier last month when CoinDesk, a media outlet specializing in the crypto industry, reported on Alameda's financial difficulties. On the 11th of the same month, FTX ultimately filed for bankruptcy protection in a U.S. court. The missing billions of dollars are a central issue in this bankruptcy proceeding.

Bankman-Fried, the largest shareholder owning 90% of Alameda's shares, emphasized in the WSJ interview that he had stepped down from Alameda's management and was not well informed about the company's internal affairs. As he revealed in interviews with other media such as The New York Times (NYT), he also denied allegations of fraud or intentional misappropriation of customer funds during the WSJ meeting.

Bankman-Fried excused himself by saying that due to internal system flaws, he was unable to grasp the scale of Alameda transactions conducted through FTX. He said he was too busy as the person responsible for FTX and was preoccupied with other projects, so he did not pay attention to the risks that arose at the time of establishment. He stated, "I did not have enough mental capacity to keep track of everything happening at Alameda."

WSJ reported that Bankman-Fried is staying in a luxury residential complex in the Bahamas and said he is holed up in his accommodation to avoid paparazzi. Bankman-Fried said, "I hardly leave the apartment. The same goes for close friends and colleagues, and it seems they do not want to talk to me right now."