Note that members of the blockchain community were unhappy with the organisers’ decision to provide a platform to speak out, which essentially improves its reputation. The Block’s representative Frank Chaparro, among others, reacted to the situation.

The Block’s spokesman Frank Chaparro

He believes that Bankman-Fried would have been better off talking just to a representative of the crypto industry who understands what is going on. However, Sam has not responded to Frank’s invitation – which also raises certain suspicions.

Why did FTX go bankrupt?

It was previously revealed that FTX had close business ties with trading firm Alameda Research, which was also founded by Bancman-Fried. Judging by the history of blockchain transactions, both organisations had been involved in insider trading for a relatively long time and were actively using client funds in their transactions.

Bankman-Fried, however, said there was no malicious intent in his actions. Here is his rejoinder to that effect.

I did not intend to intentionally intermingle funds. FTX and Alameda were much more connected than I would have liked.

As a reminder, sources claim that an FTX executive used a loophole in the exchange's system to send funds from users of the trading platform to traders at Alameda. And this was done without affecting the company's balance sheet, which is why some employees could not notice such a thing.

Sam’s speech at the event

According to Decrypt, analysts at platform Nansen had previously identified that the first “red flag” in FTX’s history was the collapse of crypto project Terra. It revealed “serious problems in the tangled relationship between Alameda and FTX”. That is, FTX management was aware of the critical situation of the exchange and tried to save it at the expense of Alameda. And in fact Bankman-Fried really did deliberately commit all these actions – although he does not admit it now.

The final blow to both companies was Alameda’s leaked balance sheet: it turned out that its reserves were predominantly made up of FTT token, which is a native FTX asset with low liquidity. In the aftermath, FTX users began withdrawing coins en masse from the exchange, as even Binance CEO Changpen Zhao spoke of its insolvency.

FTX management then admitted that the exchange simply did not have enough funds to compensate for the withdrawals for all customers. The exchange filed for bankruptcy, and Bankman-Fried was succeeded by John Ray, a lawyer who is now handling the trading platform’s legal case. Ray has handled the famous Enron bankruptcy process in the past, but he says the level of negligence in the management of FTX is unprecedented.

Additional perspective on the speech

This is how FTX has gone from being one of the major crypto exchanges with a capitalisation of over $30 billion to one of the industry’s worst crises in a matter of weeks. A few months ago, Bachman-Fried was offering large financial bailouts to other platforms on the verge of bankruptcy, and today Sam himself has become a major figure in a lawsuit that could drag on for years.

Of his philanthropy, Sam left the following quote.

My donations were mainly aimed at preventing a pandemic. They went both ways.

There is a clear implication here that Bachman-Fried donated money to both Democrats and Republicans in the US, although only the transactions of the former party were publicly reported. Furthermore, the former FTX CEO claims that donations were made only from the exchange’s profits, not from its customers’ funds.

Bankman-Fried’s persona is still covered quite positively in many media outlets. Here’s what he said about it.

I was going to support journalists who do good work. I think the existence of investigative journalism is good for the world.

Falling price of native token FTX

Another quote – talking about real estate that FTX, its management and even Sam’s parents own in the Bahamas:

It wasn’t their [Sam’s parents’] long-term property. I don’t know how it was acquired.

FTX founder Sam Bunkman-Fried

Still, what went wrong? According to the FTX founder, the root of the problem is poor risk management.

We were working hard in a direction that turned out to be a distraction from an extremely important area – risk management. There were serious problems with this.

Bankman-Fried himself has virtually no money left. He also denies all rumours about FTX management members allegedly having any hidden reserves.

I don’t have any secret funds. Everything I had, I invested in FTX.

Now Sam allegedly only has one bank account with about $100,000 in it. This is extremely small given FTX’s debts: just a few of the biggest creditors out of hundreds of thousands, the exchange owes at least $3 billion. As Bankman-Fried himself pointed out, he has indeed had a “difficult month”.


We don't think Sam deserves a place on sites like this, with interviews on top of that conducted by people far removed from the cryptocurrency world. If he wants any credibility, he should talk to journalists from the crypto world. However, if he does so, he is unlikely to be able to explain where billions of dollars disappeared to - but the blockchain community will have the final say on the platform's founder.