Sam Bankman-Fried, the founder of the collapsed crypto exchange FTX, has many regrets. But chief among them is the one that may have directly led to his company's downfall.
While lobbying for favorable crypto regulation in Washington, D.C., Bankman-Fried in meetings privately criticized Changpeng Zhao, the CEO of the rival exchange Binance. Word about the whisper campaign got back to Zhao, who ultimately set off a run by FTX's customers to withdraw their deposits by tweeting that he would sell off his huge holdings in that company's in-house cryptocurrency, FTT.
The criticism “was not a good strategic move on my part,” Mr. Bankman-Fried said in an interview with the New York Times published on Monday, just days after FTX declared bankruptcy. “I was pretty frustrated at a lot of what I saw happening, but I should’ve understood that it was not a good decision of me to express that.”
Now Bankman-Fried, often referred by crypto industry insiders by his initials, SBF, is at the center of a firestorm over the implosion. Authorities in the Bahamas, where his company is based, and in the U.S., are investigating what happened to FTX, which was valued at $32 billion earlier this year, and whether criminal charges are warranted.
The company's spectacular disintegration also set off major aftershocks across the crypto industry, which was already facing turbulence because of the sputtering economy. As soon as trouble at Bankman-Fried's business became public, virtually every cryptocurrency immediately crashed in value.
At one point last week, Zhao, after sparking the run on FTX, offered to rescue the company by buying it. But after inspecting its books, he withdrew the offer, saying that he had found serious financial problems.
Using the Signal chat app with Bankman-Fried and his representatives, Mr. Zhao simply posted a short note to break the news, according to two people interviewed by the New York Times: “Sam, I’m sorry, but we won’t be able to continue this deal. Way too many issues. CZ.”
Bankman-Fried responded to the rejection by telling employees in a message obtained by the Times: “I shouldn’t throw stones in a glass house, so I’ll hold back a bit. Except to say: probably they never really planned to go through with the deal.”
In the few days since the bankruptcy, Bankman-Fried, who lost most of his $16 billion fortune in the collapse, said he's taking it relatively well. “You would’ve thought that I’d be getting no sleep right now, and instead I’m getting some,” he said. “It could be worse.”
Additionally, Bankman-Fried said he relaxes by playing the video game Storybook Brawl—albeit from an undisclosed location out of fear for his safety.
“It helps me unwind a bit,” he said. “It clears my mind.”
