On Tuesday, the first full-length interview with Sam Bankman-Fried (SBF) since the FTX bankruptcy was posted on YouTube by citizen journalist Tiffany Fong.
On November 16, the former CEO gave his views on a number of claims made about him since bankruptcy and the state of FTX’s US customers. He also reflected on FTT, the exchange’s native token which he says has more intrinsic value than most other cryptos.
What caused the collapse of FTX and FTT
Wong started with examination SBF regarding earlier allegations that the CEO altered FTX’s financial records using a “backdoor” that allowed orders to be executed without alerting others. This claim was repeatedly repeated by Reuters in the days following FTX’s insolvency, adding that the backdoor was used to transfer client funds to FTX’s sister trading desk, Alameda Research.
“I certainly wasn’t building a backdoor into the system,” SBF replied on the call. “I don’t know exactly what they are referring to.”
Specifically, Reuters had claims on November 15, the backdoor was built by Gary Wang, head of engineering at FTX. Only Wang, SBF and his closest circle would have been aware of the movement of funds.
Regarding FTT, SBF said it does not believe the token on the exchange is worthless. “I think it’s more economical in value than the average token,” he said, due to FTT’s buy + burn mechanism, fee discounts and cash flow.
FTT started in November at over $20, but is now trading for just $1.31 at the time of writing. Its price quickly crashed when Binance CEO Changpeng Zhao threatened to sell $500 million worth of tokens on the open market.
SBF has denied claims that the token crashed due to margin calls at Alameda and FTX (in which FTT was used as collateral), or due to the illiquidity of the asset. Instead, he said it was simply a loss of confidence in the exchange that led to a massive sell-off that drove its price down.
“That was the reaction to news about FTX and Alameda specifically, and their solvency,” he concluded.
Fears around Alameda and FTX’s solvency began circulating after CoinDesk disclosed Alameda’s balance sheet on Nov. 2. The sheet showed that Alameda was overexposed to FTT, holding half of the existing tokens.
Regrets the bankruptcy of FTX in the United States
When FTX asked bankruptcy on November 11, it was joined by hundreds of affiliates, including Alameda Research and FTX US.
Bankman-Fried claimed only a day before that FTX US assets were “financially unaffected” by the fallout, leaving many confused and angry with him the next day.
The former billionaire told Wong that he was actually forced to write the case for FTX US and the clients of the US branch still had their assets fully secured. As such, they can expect decent recoveries from bankruptcy – unlike the international exchange.
“FTX US was so dissolving that it could absolutely [throw] 250 million dollars to a hat on the verge of bankruptcy, [and] it’s still solvent,” he said. “About 500 million more.”
FTX US stopped processing on-chain client withdrawals starting November 11.
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