As SBF Disses Regulators, FTX Disowns SBF

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Directly after outlandish new comments from FTX founder Sam Bankman-Fried became public, FTX’s new CEO took a moment to distance the company from the exchange’s former leader. 

In an interview with Vox, Bankman-Fried criticized regulators and expressed regrets about filing for bankruptcy, while downplaying the practice of loaning customer assets to sister firm Alameda Research. 

“Mr. Bankman-Fried has no ongoing role at [FTX], FTX US, or Alameda Research Ltd. and does not speak on their behalf,” FTX CEO John Ray tweeted Wednesday. 

Ray’s tweet came after Vox published screenshots of a series of Twitter direct messages from Bankman-Fried. 

Among the messages was, “F— regulators. They make everything worse. They don’t protect consumers at all.”

He also told Vox that he regretted filing for bankruptcy, noting that doing so was “maybe my biggest single f—up.”

“If I hadn’t done that, withdrawals would be opening up in a month with customers fully whole,” he said. “But instead I filed, and the people in charge of it are trying to burn it all to the ground out of shame. I may still get there, but after way more collateral damage. And only 50/50.”

Bankman-Fried’s own lawyers could not be reached for comment, Vox wrote.

Ray, who is also serving as FTX’s chief restructuring officer, years ago oversaw the liquidation of bankrupt energy company Enron. He became CEO on Nov. 11, at which point the exchange filed for Chapter 11 bankruptcy and Bankman-Fried resigned from the CEO post.

Lawyers at Landis Rath & Cobb and Sullivan & Cromwell, representing FTX and affiliates, said in a bankruptcy motion on Monday that as many as one million creditors could be named in the Chapter 11 cases.

Bankman-Fried has also continued to tweet following his resignation. In his latest thread, he mentioned that FTX got “overconfident and careless” as it became “the darling of Silicon Valley.”

He relived last week’s crash following Binance CEO Changpeng Zhao saying his exchange would soon dump hundreds of millions of dollars in FTX’s native token FTT in response to rumors of Alameda Research’s insolvency. Binance then said it planned to acquire FTX before backing out due to “news reports regarding mishandled customer funds and alleged US agency investigations.”

23) Roughly 25% of customer assets were withdrawn each day–$4b.

As it turned out, I was wrong: leverage wasn’t ~$5b, it was ~$13b.

$13b leverage, total run on the bank, total collapse in asset value, all at once.

Which is why you don’t want that leverage.

— SBF (@SBF_FTX) November 16, 2022

Reuters reported Sunday that at least $1 billion of FTX customer funds were missing after Bankman-Fried transferred $10 billion of user funds to Alameda Research.

Partners at law firm Kleinberg Kaplan recently told Blockworks that the “bare bones” initial bankruptcy filings submitted by FTX could signal a poor outcome for investors with frozen accounts and other exposure to the exchange.

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