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tv   Fast Money  CNBC  November 30, 2022 5:00pm-6:00pm EST

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a manipulation of the system and i want to start there because i think that there are so many people who have that question, which is what is this and what did happen. >> yeah, look, thanks for having me and at the end of the day, i was ceo of ftx and that means whatever happened, why ever it happened, i had a duty i had a duty to all of our stakeholders, our customer, creditors, our employees, investors and to the regulators and the world, to do right by them to make sure the right things happened at the company and clearly, i didn't do a good job of that. clearly, i made a lot of mistakes there are things i would give anything to be able to do over again. i didn't ever try to commit fraud on anyone. i was excited about the prospects of ftx a month ago i saw it as a thriving, growing business i was shocked by what happened
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this month and you know, reconstructing it where things i wish i had done differently. >> let's talk about some of those things but i don't want this to be an abstraction for folks because it's a lot of big numbers and often doesn't feel human one of the letters i got, i want to read to you, sam. because it's from a gentleman who said he lost his life savings. and the subject line is sam bankman-fried stole $2 million from me. it says andrew, can you please ask sbf why he decided to steal my life savings? and the $10 billion more from customers to give to his hedge fund, alameda. can you ask him why his hedge fund was averaging long all of these s coins? going to keep it polite for the kids please ask him if he thinks what happened was fraud
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these are the kinds of letters that i've been getting repeatedly over the past several days what do you tell this man? >> yeah. i mean, i'm deeply sorry about what happened. you know, for the long and short of what happened, and i'll start by saying to make a distinction here, you look at the u.s. platform, the international platform the u.s. platform is a u.s. regulated platform with american users. to my knowledge, that's fully solvent. fully funded you know, i believe that withdrawals could be opened up today and everyone could be made whole from that. that none of these problems plagued the u.s. platform. then you look at the international platform you know, they're non-u.s. users and i mean, as the letter says, alameda research did have a long
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position and the platform, it's a margin traded platform. it's a platform where all the clients were going on placing something as collateral and using that to put on a position. whether that's a futures position, a spot position, a borrow and what the exchange was storing was the collateral from all of those positions alameda research was one of those that put on positions there. and as i try and reconstruct this, you know, over the last month, i have limited access to data, but my view of it from when i had been able to see is roughly that you basically, look a year ago, alameda had i think something like 10% leverage. had something like ten times the assets of the position that it had on over the course of the last year, there were a number of market crashes that drove the value of those
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assets down and the leverage up. i think it was to my knowledge still under 2x leverage as of a month ago. you look at the, what happened this month and in a few days, all out, i mean par assault which led to a total market collapse in a pretty short period of time no bid side liquidity. i think more than $10 billion wiped off in a matter of days. and realistically speaking, no ability for ftx to be able to liquidate that position and generate everything that was owed >> i think the bigger question is where alameda got the loan from which is to say that there's a view that this is about ko mingling of funds and in that letter that i just read you, this gentleman actually copy and pasted the terms of service for ftx into the e-mail.
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and i just want to read you this it says none of the digital assets in your account are the property of or shall or may be loaned to ftx trading. ftx trading does not represent or treat user's accounts as belonging to ftx trading so how is it possible that alameda had this loan of such a large size >> so, there's that piece from the terms of service but there were a number of other parts of the terms of service, a number of other part of the platform on top of that that receive borrow lending pha sellty where users were lending billions of dollars of assets to each other collateralized by assets on the exchange you had and you had futures contracts. where they levered positions on. now, of course all of this, it's meant to be the case that these are positions where ftx could, if it needed to, margin call
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those positions and close them down in times such that it would cover all of those shorts. all those liabilities. obviously that wasn't the case here and that's a massive failure of oversight of risk management and of infusion of responsibility of myself running ftx. >> make this very straight was there co-mingling of funds that's what it appears like. it appears like there's a genuine co-mingling of the funds that are of ftx customers that were not supposed to be co-mipg with your separate firm. >> i didn't knowingly co-mingle funds. one piece of this, you have the margin trading you have customers borrowing from each other. i was surprised by how big their position was, which points to another failure hof oversight o my part and failure to appoint
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someone to be chiefly in charge of that. but i wasn't trying to co-mingle funds. >> t"the wall street journal" reported thatcarolyn eliassen told staffers alameda used ftx client funds to cover loans that were being recalled because of the luna triggered credit crunch she says she, sam, gary, were aware of this. how do you square that with what you originally said over twitter that this was an $8 billion accounting mistake >> so, i'll point to two things and first of all, obviously, i don't know what anyone else is thinking here. i can only talk about it from what i know, from what i knew. and a lot of this is reconstructing it over the last month. i have limited access to data, but you know, what it seems like happened is in the middle of the year, a lot of, most of the
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borrow lending desks in the space blew out or closed down and it seems like alameda had margin positions opened with them and that it likely moved a bunch of that over to ftx. this year. when they shut down. i think it was ove overcollateralized positions, but positions that involved substantial size on the borrow side in terms of the accounting mistake, looking through what happened, i think there's a substantial discrepancy between what the true financials, what the exchange understood. that was consistent. versus what the dashboards we had displayed for alameda's account there, which
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underdisplayed the size of that position that's one of the reasons that i was surprised when we dug into everything at how big that position has become. >> you would agree that there is a much more closely connected version of ftx international and alameda than previously understood fair to say? >> yeah. i mean given the size of the position, i think it was if not in intention, it was in effect tied together substantially more than i would have ever wanted it to be. >> so, you did an interview earlier in the summer with bloomberg and were asked about the connection and you said that obviously came from the same place. it started that way and the same people, but most of the remaining nexuss, you said, have dropped off. i know the people from alameda
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decently well, almost as if you don't know what's happening there, and there suspect like a large amount of ways that we are actively working together. alameda is a wholly separate entity they're different offices. like different principle offices. we don't have any share of personnel. we're not under the same corporate umbrella and yet it seems like alameda people were living in the same penthouse where you may very well be right now all together >> most of alameda was not there. i don't live there now, not there now, have not lived there for most of the time, but you know, i did live with one of two members of alameda for a little while and i'll also say that you know, as i was earlier this summer, looking at the relationship and this is a pretty big mistake in oversight
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of mine. i was viewing it primarily from the trading volume perspective that's what drives our revenue i was looking at what fraction of trading volume, what fraction of liquidity on the platform does alameda represent that had fallen off from something like 45% in 2019 to 2%% this year, but in terms of balances, it was a much larger fraction i hadn't been looking at that. >> but sam, i think the question is whether you were supposed to have access to these accounts to begin with you know, if i worked at a bank and was a bank teller and i decided to leave the bank at the end of the evening and take the cash that i had access to, even if i intended to bring it back to the bank even with more to give them back, i still stole the money. >> look, i wasn't running alameda. i didn't know exactly what was going on
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i didn't know the size of their position a lot of these are things i've learned over the last month that i learned as i was sort of frantically digging into this on november 6th, 7th, 8th and obviously that's a pretty big mistake. a pretty big oversight that i wu wasn't more aware. i think i was scared of -- i was nervous because of the conflict of interest about being too involved and obviously that meant that i didn't have real oversight or that it really should have meant that i failed to point anyone to be in charge of overso oversight. but i haven't been running alameda. i haven't been thinking about its finances haven't been making those decisions. but you know, as ceo of ftx, it
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was still my duty to -- >> but you owned it. >> i was a large owner of it, that is true and had a lot of exposure on that side. >> so why wouldn't you have been focused on it if in fact that's where the profits were >> well, i don't know that's where -- i think alameda had made trading profits over the last year, but ftx made profits as well. it had been a profitable, growing business that was more than a full-time job. i didn't have the bandwidth to run two companies at once. the attention for it and again, i was nervous about a conflict of interest between those two and was pretty intentional about not being very involved in what was happening at al ameda. >> when did the co-mingling of
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assets again >> so, again, you know, lots of traders had open margin positions on ftx where they would have borrows of assets and be short some asset against other assets as collateral that being said, i again, looking through this now, i think that that position size for alameda got substantially larger over the course of 2022 and that it was, i think, substantially larger by october of 2022 probably by july of 2022 than it had been in april. >> it sounds like it's fair to say there was always a connection between alameda and ftx and almost, not almost, but from the very, very beginning, and that it never really stopped. >> i think it had been in some ways, reducing when you scroll back to 2019, they were very connected in a number of ways one of these was that alameda was the primary liquidity
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provider the backstop liquidity provider. when you scroll forward to 2022, it was down to 2% of volume. we had a lot of backstop liquidity providers but it still had a big margin position on i was failing to pay nearly enough attention to positions and positional risks on the exchange and to alameda's in particular i also frankly made a mistake that i feel pretty embarrassed to have made, a lot of things are. i substantially underestimated what the scale of a market crash could look like and what the speed could look like. >> that just suggests that you were just hoping against hope that this would all work out and that nobody therefore would realize what this co-mingling was all about? >> so, it's not how i viewed it
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and in particular, again, most of the firms had margin positions. most of the firms had borrows on ftx. the problem here, this one was too big. i was surprised by the size. >> it's not just too big, it's assets that, look, it sounds like there were assets that may have been allowable to be loaned but then there were assets that weren't allowable to be loaned, no >> so, i'm still looking into the details of some pieces of this, but i do think that in addition to what i'd seen as sort of the law of standard borrows here, that we throw back to 2018, 2019 i guess, ftx didn't have bank accounts. didn't have bank accounts
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globally we were trying to get them took us a few years and you know, there were customers who wanted to wire money to ftx. so i think in the meantime, some of them were wiring money to alameda research to get credited on ftx i think that was a substantial sum. and i think that ftx's internal accounting tried to correctly debility alameda for those funds, but it didn't happen in the primary account. so it didn't happen, it created a discrepancy between the display of the account and what was really going on there and i'm still looking into exactly how that worked mechanically but that did make that position size substantially larger than i thought and i think then what you would have gotten from most of the normal avenues. >> what do you make of the
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argument that alameda was used to effectively wash money into ftx? that american investors who by the way were not technically allowed to even invest on ftx, were doing so, and ftx was doing it knowingly because the know your customer rules were being flouted by using this separate vehicle. >> how would that allow customers to flout the know your customer rules are you talking about people who are trading on ftx u.s. or customers of international >> international you just said there was money being sent to alameda and they were providing credits on to ftx. >> right, but those users still had to go through the know your customer policy in order to do that in order to use that ramp, customers still had to go through ftx's on boarding.
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>> so when do you think you knew there was a problem? >> so, the time that i really knew there was a problem was november 6th november 6th was, that was a date that the you know, tweet about ftt came out and by late on november 6th, we were putting together all the data, the information, that obviously i should have put together way earlier. that obviously should have been part of the dashboards i was always looking at. and you know, when we looked at that, there was a potential serious problem there and i you know, alameda's position was big on ftx it had just taken a huge hit
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it had taken hits over the year, but there was a particularly large one and very abrupt and we're seeing a run on the bank start and that was leading to you know, $4 billion a day of client withdrawals at that point, we started calling perspective sources of financing. because i was nervous about what was going to happen there. you know, if you rewind even a few days, i was a little bit nervous but not on nearly the same scale and i was thinking about you know, risks that were substantially less >> when you say were nervous, you were nervous the company was going to go under? you were going to get caught what were you nervous about? >> like on november 6th or before then? >> either. >> either. so i think before then, what i was nervous about was that
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basically, and this started i would say november 2nd or so, when there was the alameda balance sheet through coin desk and when i started to think a bit more about this. you know, i was nervous that that would lead to substantial losses for alameda and that you know, it would be a bit messy. i didn't think it was existential for ftx. i didn't think it was going to lead to a massive loss for ftx's customers. i was thinking of this as more like alameda is going to be really tight on funds and that you know, maybe it would end up having some small impact on ftx, but not a significant one, not one that hurt customers at all when you're talking about november 6th, late november 6th,
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then and especially as we bleed into the november 7th and 8th, i started to become nervous that ftx is not going to be able to fulfill customer withdrawals and by late november 6th, i am very nervous about that and i'm starting to think about, like, emergency scenarios and i'm starting to think about like, things might, things might end quite badly here and the core metric that i'm thinking of there is will we be able to make sure all dcustomers are whole. on november 5th, i was feeling quite good about that. on november 7th, i was feeling quite uneasy about that. >> i want to go back in time for a moment this summer, you were described oftentimes as the jpmorgan of crypto, referencing the 1907 panic that he helped prevent and
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you had purchased block fi, were making investments in voyager and all sort of other things when you were doing that at that time, how much of that was an effort to prop up the value of things like ftt, which was the token of ftx knowing that if a company like block fi, which owned a ton of it, that if it collapsed, ftt would collapse and in large part, the quote unquote collateral that you had for alameda would collapse >> so, i don't think any of the borrow lending desks to my nowne a lot of ftt i think a lot of them may have been using it, taking it as collateral i don't think they owned it though or were going to sell it. and i think that most of them ended up closing down effectively all of their lines
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with alameda one way or another. so at that point, i think that was close to a sum cost so i wasn't viewing it as having any impact on ftt in particular. i did view it as important for the industry's health. i did view it as a thing where i wanted to try to keep the industry stable. but i don't think it had any really large ftt specific impact >> you didn't think it had any impact, it would have had no impact on alameda or ftx if for example block fi were to have failed >> i don't think it would have had a large, direct impact the reason i say that is i believe that alameda ended up returning the vast majority of its open yield borrows with the borrow lending desks in the middle of this year anyway at this point, there wasn't much left to save from that you know, the, at that point, i
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think the bigger thing was just not wanting the industry to implode. >> let's talk about collateral because i think this is, this entire experience has been a revelation for people about what might be collateral. and clearly, you were using ftt, and solano and other tokens as collateral and part of that required you to mark them in a specific way a value to them. >> yep >> do you think that you were marking them properly? >> in this case, i don't think i was marking them the way i wish i had from a risk perspective. i want to differentiate here, expected value or sort of like worth or something like that from security. and you know, i think that i don't have any strong statements to make about what value they're
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assigned from sort of like a upside perspective or even a median case perspective, but clearly, i was, i was not nearly cautious enough from a downside perspective. and you know, i can tell you in my head, i was looking at a 30% down move over a few day period as a extreme tail case event that we had seen once before and then you know what happened here was a, i mean a 95% down move ore th over the course of a year and a 60% move over a few day period with very little liquidity and all happening at once in all of these coins in a correlated fashion in which hedges didn't mean as much also because this was a specific crash on assets
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associated with alameda research rather than all assets and so ooechbl correlated hedges had limited use there and a run on the bank at the same time all those are things in retrospect i should have suspected might happen because that's how markets work and you know, we've seen other examples of that min history where when things get really bad, they get really bad for all of the relevant things at once in a direct and correlated and quick way. >> i want to go back to the block fi acquisition how much money do you think alameda had borrowed from block fi at the time of the bailout? >> i honestly don't know, but would guess a couple hundred million. i don't know the answer. i wasn't paying detailed
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attention. that's my guess. >> were you using ftt and ceremserum to collateralize the loans this goes to the idea of the value of these things and also whether you were trying to buy block fi to continue to support alameda or ftx >> it might be, i would guess it was, but to your point, my guess is like the amount paid for block fi was probably bigger than the amount alameda had opened with it i don't know that for sure but i wasn't even looking at what that number was really. but i think that's about right >> i want to go back to the alameda piece of it for another moment if you'd stick with me here. you told investors and regulators that you were not involved in alameda decision making and yet in the case alameda invested $1.15 billion in genesis digital assets
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without your consultation or approval that's the question. and my understanding is you also served on the board of genesis digital assets and so i'm trying to understand how you wouldn't have been involved with alameda. >> so i was somewhat involved with venture investing and that was done out of a separate entity than any of alameda's proprietary trading than its activity on other crypto exchanges, but i was consulted on some of its vc investments including the gda. >> what are your lawyers telling you right now? are they suggesting this is a good idea for you to be speaking >> no, they are very much not. and i mean, the classic advice, don't say anything, you know, recede into a hole
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and it's not who i am. it's not who i want to be. i don't have, i think i have a duty to talk to people to explain what happened and i think i have a duty to do everything i can to try and do what's right if there is anything i can do to try and help customers out here and i don't see what good is accomplished by me just sitting locked, you know, in a room prep pretending the outside world doesn't exist. >> you're in the bahamas are you in the bahamas because you think you can't leave? >> i have been in the bahamas for the last year and i've been running ftx from the bahamas been running ftx digital market. our primary operating entity down here. with bah heem yan regulators in contact. you know, right now, i'm looking
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to be helpful anywhere i can with any of the global entities that would want my help. >> do you think you could come to the united states or go elsewhere? >> to my knowledge, i could. >> have you thought about doing that >> i've thought about it and you know, i've seen a lot of the obviously a lot of the hearings that have been happening i would not be surprised if you know, sometime i am you know, up there talking about what happened to our representatives or you know, wherever else is most appropriate >> how concerned are you about criminal liability at this point? >> so, i don't think that, obviously i don't personally think that i have, you know, but i think the real answer is it's not, sounds weird to say, but i think the real answer is that's not what i'm focusing on
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it's, there's going to be a time and a place for me to sort of think about myself and my own future, but i don't think this is it. like, right now, i mean, look. i've had a bad month this is not -- that's not what matters here like, what matters here is the millions of customers. what matters here is all the stakeholders in ftx who got hurt and trying to do everything i can to help them out and you know, as long as that's the case, like, i don't think that you know, me is the important part of that and what it makes sense for me to be focusing on >> sam, help me with this. on november 7th, you tweeted then deleted a tweet that said quote, ftx has enough to cover all client holdings. we don't invest client assets. even treasuries.
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we've been processing all withdrawals and will continue to be unquote. you then deleted that tweet and literally just moments ago you told me it was on november 7th that things took a turn. >> yep >> are you telling the truth >> so, things were changing fast and you know, when you look at november 6th, i was feeling nervous, but i felt like things were probably going to end up okay we still had, i mean, you know, assets way larger than liabilities and yeah, there was increasing withdrawal demand, but we were meeting all of it, processing all of it although it was a weekend so we were a day delayed on a lot of wire transfers and stable coin and bitcoin was overloaded, but assets were continuing to process. by november 8th, i did not think theodds were that high that we
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were going to meet all client demand and i was worried there was going to be a substantial liquidity shortfall. november 7th was sort of the transition day even the start versus the end of november 7th, i felt fairly different and i can't remember exactly or when i sent that, but you know, i remember trying to think about feeling conflicted about what to say about trying to think about what i could say that i believed and by not that long later, i no longer believed that no longer felt like it had much, like that was a at all reasonable representation of where my mind was at and i don't remember exactly when i deleted it >> let me ask you a different question because this was around the same time. "the new york times" reported that $515 million was suspiciously in quotes transferred from ftx wallets after the bankruptcy filing and
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there have been accusations that this is the assistance effectively of theft where did that money go? >> so, i will caveat this by saying at this point, i was being cut off from systems so i'll give you the absolutely to the extent that i know it which is that i believe that a few different things happened within a short period there. i think that the u.s. team took actions to seize some of the assets and put it in custody from the exchange. i believe that the regulators took some of the assets into safekeeping as well around that same time. and i think there, in addition to both of those, also been some actually improper access of
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assets on the exchange and i don't know the details of that i don't have the resources to trace through exactly what happened there and i don't know who is behind that third part. >> i want to go back to one thing about the bahamas. the authorities have now admitted effectively they ordered the transfer it sounds like of certain ftx assets to wallets under their control after the u.s. bankruptcy was filed. did you help them with that? did you discuss that with them >> so, i can't discuss specifics, but i will note that prior to chapter 11 having been filed, the bah authorities placed markets, the entity was the primary operating entity of ftx international of supervision of a jpl system in the bahamas with oversight from the securities commission of the bahamas and you know, were, to
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my knowledge, taking actions to protect ftm's clients and customers there. >> can we just go back for one second i apologize for belaboring this point, but we were talking about ftx and the derivative piece of it earlier and i made a note earlier about this because you had told the senate, you were sitting in the senate at the time on february 9th, 2022, you said quote on ftx u.s. derivatives, all of these contracts are fully collateralized was that true? >> yes and again, ftx u.s. to my knowledge totally solvent. derivatives, totally solvent and in fact, i believe ftx derivatives may be up and running right now. i'm confused why an ftx u.s. is not processing customer withdrawals right now. i would think it should be because i believed to my
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knowledge that it could be and could make all americans 100% whole from this. and ftx u.s. derivatives as i said there, doesn't even allow leverage of any sort it was close to a spot trading platform and so to my knowledge, all american customers and all american regulated businesses and exchanges here are i think at least in terms of finances, are okay obviously i don't know what's happened with you know, make your own judgments about the enterprise value >> over the summer, you paid a $2.5 billion loan to genesis this was in august i was just trying to think through the dynamics of what might have been happening at your firm and was wondering where did the money come from. >> i presume that's alameda research >> yes that's the case. >> so, i don't have all of the details there, but my understanding is that, and i
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don't know exactly what's going on on genesis' side. i don't know now, but my understanding is i believe genesis tried to call in a large number of loans from alameda i believe that that happened and that that closed down a lot of positions that alameda had open with genesis and other trading desks and you know, that was what i was thinking at the time. that's i think what happened there. i also think that may have led to an increase of position size at alameda on ftx in retrospect. >> right you did an interview i think perhaps inadvertently over twitter dms with a reporter at vox and had spoken about esg, but also about what you described at the shifl louse of it what it meant to look good in
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corporate america today and that a lot of the thing that is you were doing were not necessarily things you actually believed or believed in. can you speak to that? >> yeah. absolutely and i was -- not meant to be a public interview it was a long time friend of mine who i stupidly forgot was also a reporter. i thought i was speaking in a personal capacity. i'm not sure what they thought the capacity was at the time, but it certainly ended up being reported on. and you know, i think what i'd say is look, there were a lot of things i think have a massive impact on the world. that's what i care about the most i think frankly that you know, block industry could have substantial positive impact, but you know, i was thinking a lot about you know, bed nets and
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malaria, saving people from diseases no one should die from the -- pandemic prevention, and what what could be done on a large scale to help mitigate those those things i think matter and are among the most important things to me separately from that, there's a bunch of bullshit that regular lal companies do and these are things that everyone who does them basically knows they're kind of dumb that these are not things that are making large impact on the world. these are not looking at saving tho thousands of lives these are the kind of, like, if three different quarterbacks threw a touchdown in the same game for the same team, we'll donate two used cars to charity campaigns where it's not going to happen. it's never going to happen there's no expectation of a car
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getting donated. it's just a pr campaign sort of masquerading as dukerism and things like -- end up in a similar area >> fair to say you participated in this. >> yeah, we all did. and i, you know, ftx dids a well there are things i felt we needed to do for the business. there are things i felt like were crucial for us being able, i wish the world didn't work this way i wish that these weren't relevant to your ability to get regulated. to your ability to get bank accounts, but they were. and yeah, we had promotional campaigns. we had you know, marketing slogans and you know, we thought about what we could do to, we thought of ourselves as legitimately trying to do good, but we also thought about what
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we could do to make sure that our image reflected that and there's a lot of just unimpactful things there that ultimately i think in some circles got more attention that actually impactful things. and you know, i think that on the more tasteful end of the spectrum, you can see things like small scale but real charitable initiatives and on i think the less tasteful end of the spectrum, frankly speaking, i think things like making sure that all materials have perfect english grammar is a thing where that was important. >> sam, let me ask you about this though because the other piece of it is using your money and influence and i think there's a question about whose money you were using, but to donate for example to the
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democratic party in large part to influence regulation and i think as people have looked through now some of the regulation you were pushing for at cifisa for example, some would have allowed you to quote self-certify a lot of what was going on at ftx and there are people who look at that and say it was all part of a scheme. >> so, unpacking pieces of that. when you look at the cftc regulation there, ultimately, there may have been an ability to self-certify contracts, but prior to that, we went through a congressional hearing, a public comment period, a public round table, a year of inquiries and tens of thousands of hours, thousands of pages of submitted documents and still had not
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gotten to the point of having a license to offer emerging futures in the united states and so it was an extraordinarily long and hard process that we were going through with the cftc and you know, it was by far the most intensive regulatory process. >> can you speak to the lobbying piece of it though and the donations piece of it? because i think that's become part of this story as to whether you effectively were influencing lawmakers to do yourbidding an given the state of your current company, questions about whether that should be the case. >> so, i mean lawmakers were not ruling on ftx. ftx didn't have an application before congress. for anything you know, my donations were mostly for pandemic prevention and they were looking at primary
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elections where there were candidates who were outspoken in favor of doing things now to prevent the next pandemic. that was the primary thing that i was supporting with those contributions and you know, it was on both sides of the aisle primarily operating in both primaries. i wasn't doing it as a partisan exercise i was not you know, most of this was not looking at donating to one party to beat the other one in the general elections here. not only was it on both sides, but even with any side, it was between two candidates in the same party >> where did the money come from for those donations? >> i basically, profits. i mean, you know, it was substantially smaller than the you know, amount of trading profits that alameda had made over the prior few years >> related to this, you had a meeting --
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>> we have been listening to andrew's interview with sam bankman-fried. this is "fast money" and i'm melissa lee. there's a lot to unpack here with this interview that's been going on for about 47 minutes tonight so far let's get to the desk. tonight, tim, karen, dan, and guy all here with us today tim, there was a lot of i didn't know >> not knowingly >> there might have been co-mingling. i didn't knowingly do this or that >> i'm obviously not an attorney, but trying to sound like you didn't commit a crime is probably the first thing you want to establish. call my cynical. this is one of the smarter folks out there. to me, there's so much inconsistentsy
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trying to show there was no content. >> let's listen in >> whether you were trying to buy influence. can you speak to that? >> i lost good media ventures. that was the whole thesis there. you know, i don't have like governance over any of these i wasn't looking for governance over any of them i was looking to support journalists doing great work because i think what they do is really important and i think that there needs to be a critical light on stories. i've certainly seen, being on the, on the getting the brunt of a lot of that right now and you know, frankly i think it's healthy for the world that there is real investigative journalism >> your parents are law professors what do you tell them when all of this happened >> i mean, i don't remember exactly when i reached out to
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them, but you know, i think i called them up and said hey, guys, i think there might be a problem. like, things, looks like alameda's position might be imploding here and there might be liquidity issues and i'll tell you more when i know more that's my guess about roughly what i said, but honestly, that week so much happened, it's a little bit of a blur to me exactly what was said. >> what are they telling you now? >> look, it's been, it's been a hard period for anyone who was close to me. and none of them deserved that and i feel really, i mean, look, like, a lot of, obviously the largest number of people who were hurt here were customers and i feel incredibly bad about
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that but anyone who was close to me, you know, including my parents, including employees, co-workers, who you know, fought with the company to push forward were hurt by this and bore no responsibility for that. i feel really bad about that and i mean, i feel really grateful for the support my parents are still giving me throughout all of this. >> can you explain the real estate piece of this to us i think there's been a number of headlines as you know about ftx the company buying a lot of real estate up in the bahamas where you lived at least at the time was owned by the company. but then there's also reports that your parents signed and were effectively provided with what seemed like a vacation home >> so, i don't know the details of the, that house for my parents, but i know that it was not intended to be their
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long-term property it was intended to be the company's property i don't know how that was papered and i think that was where it was, was and will end up i think they may have stayed there while working, you know, with the company sometime over the last year. when you look at the rest of it, there were a lot of property purchases in the bahamas the reason for that is we had you know, 100 basically 100 silicon valley employees come down here to work for ftx and you know, we were trying to incentivize that and to you know, make sure they had easy way to find a comfortable life so they would be willing to move and help build out the product so you know, those hundred people put together here did end up buying a substantial amount of property and i felt, i feel
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bad about how some of those investments may turn out for them >> can you just speak to the idea of this company, that at least from the public perspective, seemed like a regulated company or something that was very focused on compliance you would go to washington you would talk about compliance. about trust. crypto ultimately is actually about trust. it's about not having to trust others frankly it's supposed to be a trustless system trust it so much supposedly. >> yep >> but it seems like when you read the stories, it sounds like a bunch of kids who were on adderall having a sleepover party. >> look, i screwed up. like, i'm the ceo. i was the ceo of ftx and i mean, i say this again and again, that
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that means i had a responsibility that means that i was responsible ultimately we didn't. like, we messed up big >> but there were people though telling you you needed more compliance, no >> there were, but i think that compliance, we were spending an enormous amount of our energy on compliance on regulation, on licenseture. we were getting licenses in dozens of jurisdictions. i think frankly we were spending too much of our energy getting licensed in retrospect and you know, there were some places where i think that the reporting and trans pparency obligations from that actually did help i think when you look at ftx derivatives, japan, which i think is fully solvent, which i think could make all customers
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whole tomorrow if the sort of relevant things were to allow it to i'm confused why it hasn't but you know, i think that a lot of what we ended up doing and focusing on was a distraction to some extent from one unbelievably important area that we completely failed on and that was risk that was risk management that was you know, customer position risk. and you know, frankly conflict of interest risk and you know, there was no person who was chiefly in charge of positional risk of customers on ftx and that feels pretty embarrassing in retrospect because that was, you go back to 2019 even 2018, ask why am i starting
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to build out ftx, what's the point of it. what i would have said is look, existing crypto derivatives exchanges have large risk management failures that every day, there are millions of dollars that are being lost by customers because of risk management failures that these contracts are paying out 75 cents on the dollar week after week after week because of risk management blowouts and that that needs to be overhauled and that was what i was focused on for the beginning of ftx i was not focused on that for the last year or two i got less grounded from that and i started focusing on the bigger picture on you know, future business avenues. on licenseture we lost track of really important part of the business and of the product and so there absolutely were huge management failures
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i take responsibility for that oversight failures s so many things we should have had in place i think a lot of it was on the risk management side >> we had larry fincke here today and he had a stake in ftx and sequoia and paradigm and some very big venture capital firms had given you money. i'm curious if they ever asked you questions about this risk management and whether they bear any responsibility for what clearly now appears and you're saying was at minimum, a lack of oversight, if not something much worse. >> i don't think they bear responsibility like when you look at, when you put yourself in the eyes of an investor, a venture capital firm, what you're thinking about primarily is upside. when you're thinking about primarily is investing in a
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private company and thinking might this 3x, 5x, even 10x? and yeah, there's some chance it will go down maybe down to zero but that's counterbalanced by the upside propositions here and so most of what they were focused on was you know, i think like what might ftx become what's the pathway to get from here to there? what would it take what are the missing pieces? you know, rather than you know, at the point where you're dwelling on all of the precise downside scenarios and risks for an investment, that means you're not investing. if that's where you think things will end up, why would you do the investment >> can i ask you about the drugs? you have tweeted about it. caroline has about uppers and downers and all
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