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SBF's ignorance-as-defense strategy cuts no ice

Cryptocurrency Dec 01, 2022 06:02AM ET
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By Geoffrey Smith 

Investing.com -- Sam Bankman-Fried continues to claim he didn't know of any wrongdoing at FTX, but the world isn't buying it.

In an interview with New York Times columnist Andrew Ross Sorkin on Wednesday, the founder of the collapsed crypto exchange leaned heavily on arguments that boiled down to admissions of ignorance or a lack of understanding when pressed on how his exchange - which told customers their assets would be held separately from its own funds - ended up lending billions of dollars to hedge fund Alameda Research.

Alameda was also majority-owned and controlled by Bankman-Fried until it was included with 130 other FTX affiliates in its chapter 11 bankruptcy filing. It had borrowed heavily from FTX over the summer to cover up losses arising from the collapse of the Terra/Luna stablecoin network. According to data from Arkham Intelligence, it had drained $204 million from the exchange only days before FTX collapsed. The gap between their combined assets and liabilities is widely estimated at over $8 billion, suggesting that the majority of customer deposits - which weren't protected by any insurance scheme - will not be recovered.

"I didn't ever try to commit fraud on anyone," Bankman-Fried said, adding later that "I didn’t knowingly commingle funds" and "I don't know of times when I lied."

As regards, Alameda, he argued: "I wasn't running Alameda, I didn't know exactly what was going on. I didn't know the size of their position."

However, most observers of FTX's implosion were unimpressed.

"Ignorance of the law is not a defence. And nor is incompetence," tweeted Frances Coppola, a veteran financial commentator based in the U.K.

Dan Davies of Frontline Analysts was even more scathing.

"When you tell people their money is segregated and it's not, when you use one company's bank account and represent it as another, that's fraud!" he argued. "Fraud isn't a "subjunctive crime". Even if you make the money back, even if the client funds are eventually protected, the fraud still happened."

Ross Gerber, CEO of San Francisco wealth management firm Gerber Kawasaki, had tuned in, along with thousands of others, hoping to hear more than the generally long-winded and evasive answers that Bankman-Fried gave to simple and direct questions about the missing customer funds. He soon gave up.

"Had to turn this off. Call me when he is wearing orange," Gerber tweeted halfway through the interview.

However, 'SBF' could still count on pockets of support from the global audience.

"Call me crazy, but I think SBF was telling the truth," tweeted Bill Ackman, the billionaire investor behind Pershing Square.

Ackman is a belated convert to cryptocurrency, having invested in recent months in projects such as DIMO, Goldfinch Finance, and ORIGYNTech. He argued in a blog post after FTX's collapse that "crypto is here to stay and with proper oversight and regulation, it has the potential to greatly benefit society and grow the global economy."

SBF's ignorance-as-defense strategy cuts no ice
 

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Comments (14)
Michael Roal Casa
Michael Roal Casa Dec 01, 2022 11:00AM ET
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cryto has a value maybe in pharmaceuticals or something but as a non-finacially-backed speculative monetary instrument that is not limitless, as no more coins will be produced soon. This investment-sic only made money for the people at the top of this Ponzi scheme
David Sather
David Sather Dec 01, 2022 10:56AM ET
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He needs a hair cut
Alex Malmstrom
Alex Malmstrom Dec 01, 2022 10:56AM ET
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That's probably his next scheme, selling his hair on eBay lol!
Tyler Phillis
Tyler Phillis Dec 01, 2022 10:22AM ET
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Remember folks, all this is brought to you by the moral code of Altruism…which states explicitly AND implicitly that the ends justify the means.
Jurgen Daub
Jurgen Daub Dec 01, 2022 10:20AM ET
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well, he will get a few years. than write a book when i jail and then leave as a millionaire, while all the speculators lost their money.
sandeep ÌÍ
sandeep_ Dec 01, 2022 9:51AM ET
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poor chap.. 😞
me ish
me ish Dec 01, 2022 9:42AM ET
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this guy is a fraudster and criminal - plain and simple - and yet he's at the New York Times interview session on stage with Zelinski, Zuch and the rest that have sold out to the Dems and CIA mafia  - utterly shocking that he's not in prison awaiting trial
Dennis Chuck
Dennis Chuck Dec 01, 2022 9:30AM ET
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Ignorance?? Ha ha!
Dan Star
DS5657348 Dec 01, 2022 9:17AM ET
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I thought Bitcoin meme is Scarcity. These fly by night firms create their own coins to steal customer wealth.
Gus McCrae
Gus McCrae Dec 01, 2022 9:14AM ET
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Blaming his ex, classy
Ron George
Ron George Dec 01, 2022 9:00AM ET
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Anyone, including Bill Ackman, who defends ir believes SBG’s pathetic defense of “not knowing what happened” is most likely guilty of similar actions and fraud!
Ben Bigs
Ben Bigs Dec 01, 2022 9:00AM ET
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Cut from the same cloth
 
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