SBF’s Explanation Points To Commingled Funds On FTX

December 5, 2022 at 05:26 PM GST 2 mins read Exchange News

Sam Bankman-Fried admitted to facts about his defunct crypto exchange.
He also participated in a Twitter chat with cryptocurrency personalities.
Bankman-Fried said that he didn’t deliberately co-mingle cash.

In his most recent interview, Sam Bankman-Fried appeared to acknowledge facts about the defunct FTX cryptocurrency exchange. SBF admitted that funds were meant to be kept in separate customer accounts with other company businesses.

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"I've had a bad month." Sam Bankman-Fried’s $32 billion cryptocurrency exchange, FTX, plunged into bankruptcy this month. He said his lawyers did not want him to talk, but he answered questions at The New York Times DealBook Summit. https://t.co/IKEPcphTDm pic.twitter.com/qYSSCEaDuO
— The New York Times (@nytimes) November 30, 2022

This made it challenging for investors who believed they had straightforward positions to get their money out as digital asset prices fell early last month.

What’s more, he was asked why customers could not retrieve their holdings as a crisis in digital assets blossomed. This was despite terms of service that stated the investments were not allowed to be used by FTX.

The former CEO answered that the exchange would have been able to make those investors whole if it could have settled its other positions. But that raised the question of why the funds were tied up with margin and futures positions in other kinds of accounts.

Bankman-Fried participated in a Twitter chat with cryptocurrency personalities on Thursday evening, New York time. Almost 40,000 people listened to the talk which featured Mario Nawfal, Simon Dixon, and Chet Long, according to Bankman-Fried. He said:

“So that was one piece of the terms of service. But there are many pieces of the terms of service concerning other parts of the exchanges.”

“Parts of the terms of service are overridden by other parts of the terms of service,” he added.

In a prior interview with the New York Times, Bankman-Fried said that he “didn’t deliberately co-mingle cash.” Additionally, he said there was no “improper usage” of FTX customers’ money on ABC’s Good Morning America.

Jesse Powell, a former CEO of the Kraken exchange, proclaimed that exchanges do not operate under the net account equity concept. It’s noteworthy that he did so while Sam Bankman-Fried’s interview was still going on.