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"What Happened" After the collapse of FTX, SBF's first interview

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"If I can focus more on what I'm doing, I can do it more thoroughly, and that will give me a sense of where the risk is."

Original title: "How Sam Bankman-Fried's Crypto Empire Collapsed"

Original author: David Yaffe- Bellany @nytimes

Original compilation: Peter Pan @BlockBeats

The collapse of the FTX crypto empire

In the span of a week, cryptocurrency billionaire Sam Bankman-Fried went from industry leader to industry villain, lost most of his fortune, and watched his $32 billion company go bankrupt before the SEC and Subject of Justice Department investigation.

He has been compared to financial giants such as American investment bankers J.P. Morgan and Warren Buffett, but eventually due to a deposit run, his cryptocurrency trading platform FTX had an $8 billion gap, forcing the company to close down and file for bankruptcy. And, the damage rippled through the industry, destabilizing other cryptocurrency companies and creating widespread distrust of the technology.

In addition to some Twitter posts, messages to employees and the occasional text message to reporters, SBF, 30, has said little in public over the past week.

SBF also sounded eerily calm in an interview just after midnight on Sunday : "You might think I can't sleep right now, but I did for a while, or it could have been worse," SBF said.

Failure stems from expansion too fast

At the same time, SBF also expressed numerous regrets about the collapse of FTX, but he only provided limited details to explain the related problems surrounding him and FTX . And whether FTX improperly used billions of dollars in client funds to support Alameda Research, a quantitative trading firm he founded, the relationship is under review by the Department of Justice and the SEC.

SBF said, "Alameda has accumulated a large margin position on FTX. It is much larger than I thought. The size of the position is billions of dollars, but in fact the downside risk is also very large." meaning it borrowed funds from the trading platform, but SBF declined to provide further details.

However, SBF does agree with critics in the crypto community that he has expanded his business footprint too quickly across the industry, and said that some of his other commitments have prevented him from seeing signs that FTX is already in trouble.

“If I can focus more on what I’m doing, I can do it more thoroughly, and that will give me an understanding of the risk side of things,” SBF added.

< h3>SBF moved three times

Currently, SBF lives in the Bahamas, he declined to comment on his current location citing security concerns, FTX’s lawyer did not respond to the request.

The collapse of FTX shocked the crypto world. But in recent months, there have been signs that his business empire is in jeopardy and that his ambitions are out of his control, according to interviews with nine of his colleagues and business partners, as well as insider information obtained by The New York Times. scope.

And the relationship between Alameda and FTX was the root of SBF's downfall. He founded the quantitative trading firm in 2017 and rents an office in Berkeley, Calif., not far from Stanford, where he grew up. In no time, the company was making millions through arbitrage in the bitcoin market.

In 2019, SBF relocated the company to Hong Kong, which has a more friendly regulatory environment. He moved in with a group of traders — including former fellow trader Caroline Ellison at financial firm Jane Street — and went on to start FTX, a platform for cryptocurrency investors to buy, sell and store digital assets.

2021 Attracted by regulators in 2010, SBF moved FTX to the Bahamas, where regulators allowed him to offer risky trading options that were not legal in the United States. At FTX, investors will be able to borrow money to bet on the future value of cryptocurrencies.

Furthermore, FTX has close ties to Alameda, which trades heavily on the FTX platform, which means it sometimes loses money when other FTX clients lose money benefit. In the past, SBF has defended such operations, saying Alameda provided vital liquidity, injecting capital to enable other clients to complete trades on the trading platform.

FTX core group of 15 people

According to a person familiar with the company's inner workings, Alameda is run by Ms Caroline Ellison, in which SBF is also involved, contributing to decisions on large deals, but sometimes there seems to be a conflict between the businesses. Not many firewalls. Alameda was supposed to operate from a separate office, but a client who visited the FTX building in recent months saw Caroline Ellison sitting in front of a computer displaying trading data from the trading platform.

On the other hand, despite billions of dollars invested in the company by venture capital firms, But FTX does not have any outside investors on its board. In addition to SBF and Ellison, the executive circle at FTX in the Bahamas includes Director of Engineering Nishad Singh, Chief Technology Officer Gary Wang and Head of Product Ramnik Arora.

In the Bahamas, SBF lived a life of isolation at times, surrounded by a small group of colleagues , who lives with Caroline Ellison, Nishad Singh, Gary Wang and six others in a five-bedroom penthouse in the Orchid Building at Albany Resort, a 600-acre beachfront resort on New Providence Island in the Bahamas. Two people said that SBF and Caroline Ellison were sometimes in a relationship.

At present, however, SBF stated that he and Ms. Ellison are no longer in a relationship, but declined to comment further, and Ellison did not respond to this.

When asked if he relied too much on that small group of people, SBF said he My close circle of colleagues is about 15 people. “Precisely, I don’t think anyone can maintain close contact and communication with more than 15 people,” he explained.

"Altruism" and "Arbitrariness"

All the while, SBF and his circle of associates claim to be committed to effective "altruism," a charitable movement that urges followers to give in efficient and logical ways their wealth. But for colleagues outside the group, it can sometimes be difficult to find time to talk to SBF, which prides itself on the fact that FTX has only about 300 employees, much smaller than its main competitors, Binance and Coinbase, a person familiar with the matter said.

While laying off employees, SBF has also invested in dozens of other cryptocurrency companies, buying stockbroker Robinhood stock, donated to political campaigns, gave media interviews, and hoped to give Elon Musk billions of dollars to help fund his Twitter acquisition.

Share this information with key employees. When he was told to overextend and encouraged to hire more staff, he also rejected those suggestions.

And in Washington, the SBF is pushing an ambitious regulatory agenda while criticizing rivals Changpeng Zhao, CEO of trading platform Binance, but Zhao eventually mobilized his extensive Twitter following, sparking a flight to the FTX platform.

Later, SBF stated that "Given the issues Worth it, rather an investment in other companies".

"Love and Kill" with Changpeng Zhao

Perhaps SBF's most ambitious goal is shaping crypto regulation in Washington, where he testified before Congress and met with regulators. He also used his growing influence in Washington to criticize his biggest rival, Changpeng Zhao, in private meetings, people familiar with the matter said.

SBF attended a Senate committee in February, source AFP: Getty Images

And Recently, SBF said, "Criticizing Zhao is not a good strategic move for me. I am very frustrated about it. I should understand that expressing this is not a good decision for me."

As a former investor in FTX, Changpeng Zhao still owns a large amount of FTT, a cryptocurrency launched by FTX to facilitate transactions on its platform. On November 6, Zhao announced the sale of FTT on Twitter, which triggered many FTX platform customers to quickly withdraw their deposits.

At the same time, Zhao Zeng wrote on Twitter: "We will not Pretend to remain intimate while we will not support someone who is lobbying against other industry players behind their backs.”

Furthermore, when FTX collapsed, Changpeng Zhao initially agreed to acquire the A trading platform is equivalent to a bailout. But soon, the deal fell through after Binance discovered that FTX had financial problems.

In a Signal group chat that included SBF and other FTX representatives, Zhao posted A short comment: "Sam, sorry, we can't go ahead with this transaction, there are too many problems with FTX."

Why Alameda misappropriated FTX client funds

Since then, SBF hastily prepared new financing, and mentioned in an internal letter to employees: "I shouldn't laugh at them, they probably never really planned to complete this transaction."

Meanwhile, at a meeting with Alameda employees on Wednesday, Ms. Ellison explained the collapse, according to a person familiar with the matter. Her voice trembled a little and she apologized for letting everyone down.

Caroline Ellison stated: "In recent months, Alameda has obtained loans, but at the same time That money went into venture capital and other payouts, but around the time the crypto market crashed this spring, lenders started calling back on those loans. The money Alameda spent was no longer readily available, so the company used FTX client funds for the disbursement. Meanwhile, besides her and SBF, there are two other people who know about the arrangement: Nishad Singh and Gary Wang.

The Wall Street Journal previously reported on the meeting, but Singh did not respond to requests for comment. Wang was also unable to be reached. According to people familiar with FTX's financial situation, the trading platform provided Alameda with loans of up to $10 billion.

Improvisation

With the collapse of FTX, SBF said on Sunday that he has been working constructively with regulators, bankruptcy officials and the company in an effort to do what is best for consumers.

But he is now the subject of an investigation by New York federal prosecutors, and they have begun contacting possible witness. Several people with knowledge of the matter said that others related to FTX have also begun contacting lawyers for possible representation. The law firm of Sullivan &

Meanwhile in the interview, SBF declined to discuss the possibility of going to jail.

“People can say all the mean things they want about me online but What matters to me is what I do and what I can do,” says SBF.

In addition, in recent days he has found other ways to pass the time, such as playing video games Storybook Brawl, though less played than usual. "But it helps me relax a little bit, it clears my mind," SBF explains.

And for the recent series of mysterious tweets: "1) What, 2) H ..." SBF said, "I don't know, I'm just improvising, I think it's time. The next step will be to release the letter A first, then the P, it's not just a word, I'll fill it out as I go."