Sam Bankman-Fried claims to have “miscalculated” $8 billion in FTX funds
Mathematics doesn’t seem to be the MIT graduate’s strength.
FTX founder Sam Bankman Fried — an alumnus of the vaunted university — offered an outlandish explanation for the $8 billion budget shortfall that helped force the doomed cryptocurrency platform into bankruptcy last month — claiming he simply “miscalculated” the funds.
Bankman-Fried was quick to explain what happened at FTX during an interview with Bloomberg from his palatial home in the Bahamas. During the interview, the cryptocurrency bro pulled out a spreadsheet detailing the bad accounts he used while contacting investors for a potential bailout of FTX and its sister trading company, Alameda Research.
In a section titled, “What I *I* thought,” Bankman-Fried lists $8.9 billion in debt against nearly $28 billion in assets — of which $9 billion is allegedly “liquid.” In another section by actual numbers, FTX had $8 billion less in liquid assets than Bankman-Fried claimed.
“It sounds naive to me, you know, there are still some big liabilities, but, like, we should be able to cover them,” Bankman-Fried told Bloomberg.
Then a Bloomberg reporter pointed out the $8 billion difference.
“I missed $8 billion?” the reporter asked.
“Wrong with the arithmetic,” replied Bankmann-Fried, who studied mathematics while graduating from MIT with a bachelor’s degree in physics.
The report highlighted the extent to which FTX and Alameda were financially mixed prior to the company’s bankruptcy. Last month, Reuters reported that Bankman-Fried had secretly transferred $10 billion of FTX clients’ funds to support Alameda Research’s risky bets.
Bankman-Fried made his final defense of FTX’s inner implosion from the luxury penthouse where he, his ex-lover Carolyn Ellison, and a small group of roommates ran FTX and Alameda Research. Ellison served as CEO of Alameda until its collapse.
Bankman-Fried went on to claim that customers sometimes send their money to Alameda instead of FTX. He also confirmed that the FTX system counted these funds twice, which could explain the discrepancy in the numbers.
The discredited executive never fully explained what happened to the $8 billion in assets missing from the initial balance sheet.
“I was really lazy about this mental math,” Bankman-Fried said at one point in the interview.
Bloomberg also pressured Bankman-Fried to respond to criticism that he was blaming the collapse of FTX on Ellison and his other subordinates.
He replied, “I think the biggest failure was that it wasn’t entirely clear who was at fault.”
FTX’s poor accounting practices under Bankman-Fried and his allies drew sharp criticism from the company’s new leadership in a bankruptcy court filing.
New CEO John Ray III, who led Enron through its bankruptcy, said FTX’s accounting practices and corporate governance standards were the worst he had ever seen. He also called for extravagant spending by Bankman-Fried and others, including $300 million on luxury real estate and emoji-approved expense requests.
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