On April 27, Skybridge founder Anthony Scaramucci revealed what FTX’s final days were like, stating that most employees of the failing exchange probably didn’t know what their executives were doing behind closed doors until it was too late.
At a round table entitled “FTX: What happened?” In Consensus 2023, Scaramucci gave a detailed account of what happened from his perspective. The Skybridge founder said that he remembers hearing that FTX CEO Sam Bankman-Fried had made negative comments about Binance CEO Changpeng Zhao, also known as “CZ.”
Scaramucci claimed that CZ responded by selling his stake in FTX Tokens. However, Zhao’s stated reason for selling FTX Tokens was “post-exit risk management,” likely because he reviewed a leaked company balance sheet that showed a troubling connection between FTX and sister company Alameda Research. However, Scaramucci was emphatic in stating that CZ did not cause the bankruptcy of FTX, explaining:
“If Sam had run the business properly […] business would have been good […] Some people have jumped on a stage like this and said, ‘Well, Zhao put Sam out of business.’ No no. Sam broke himself by the way he ran that business.”
Scaramucci said that on November 6 or 7 he had just returned from giving a speech in Florida. After speaking with Bankman-Freid’s father, he learned that there was some kind of liquidity problem at FTX. He thought that the exchange had the necessary assets to repay depositors, but that these assets could not be sold quickly, so he threatened to force the exchange to stop withdrawals.
Scaramucci wanted to help the exchange, he said. But “later overnight, that number went from $1 billion to $4.5 billion,” referring to the dollar amount of the liquidity shortfall. This convinced him that something more serious was happening on the exchange. He immediately booked a flight to the Bahamas to visit FTX headquarters and find out what was going on. When he arrived, “the war room was finished, and I would say it was clear to a few people that there was a very small group of people who had done some things that they wouldn’t let others in,” he explained.
Scaramucci said the FTX collapse was an example of why fraud is almost always committed by a small group of people:
“The way crimes are committed is by very small groups. It is very difficult to commit a crime like this with a large group of people because what you learn from psychology and sociology, there is always a person with a conscience who comes out and says: ‘ Hey, I don’t want to do this.'”
Scaramucci hinted that FTX was a fraud and not simply the victim of liquidity crises caused by market events, stating:
“Three of those four people have already pleaded guilty. So guys, when you open the windows and hear the clippity clop outside, it’s a horse. It’s not a zebra.” […] It will be very interesting to see how Sam makes a decision on his own plate.”
FTX filed for bankruptcy in November. Two of its executives, Gary Wang and Nishad Singh, have pleaded guilty to fraud, along with Caroline Ellison, the former CEO of Alameda Research. Bankman-Fried has also been charged with fraud. However, he has pleaded not guilty and claims that he can recover some of the lost money.
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