Sam Bankman-Fried says lawyers telling him to ‘recede into a hole’

Sam Bankman-Fried, the ex-billionaire whose cryptocurrency platform FTX crashed spectacularly earlier this month, said Wednesday during an hourlong interview that his lawyers are advising him to “recede into a hole.”

Speaking from the Bahamas via video link to the New York Times’ DealBook summit, Bankman-Fried said he was receiving “the classic advisories – don’t say anything, recede into a hole” from his legal counsel as he deals with allegations of fraud following the collapse of his crypto trading platform, formerly valued in the tens of billions of dollars.

“That’s not who I am, and that’s not who I want to be,” Bankman-Fried said. “I have a duty to talk and explain what happened.”

Bankman-Fried has given interviews to a range of publications amid the implosion of his crypto empire this month, including a frank exchange with a Vox reporter via Twitter messages that he said was not meant to be public.

Questions are swirling now over whether the failure of FTX is due to negligence and mismanagement or a fraudulent scheme wherein certain investors had their losses recouped and regular customers lost the value of their holdings.

“I didn’t ever try to commit fraud on anyone,” Bankman-Fried said during Wednesday’s interview.

The Wall Street Journal reported earlier this month that the U.S. Securities and Exchange Commission (SEC) and Department of Justice are investigating FTX, which has filed for bankruptcy.

Bankman-Fried said that his company should have been able to reimburse its customers and cover its liabilities.

“Obviously, that wasn’t the case here, and that’s a massive failure of oversight of risk management,” he said.

The problem, Bankman-Fried said, was that FTX funds had been “co-mingled” with funds from a separate firm also majority-owned by Bankman-Fried, Alameda Research.

“I unknowingly co-mingled funds,” he said. “I was frankly surprised by how big Alameda’s position was, which points to another failure of oversight on my part, and failure to appoint someone to be chiefly in charge of that.”

Bankman-Fried, whose company was operating without a chief financial officer or a specifically designated board of directors, said he missed the extent of the co-mingling because he was paying attention to trading volumes as opposed to overall balances.

Speaking earlier in the day, Treasury Secretary Janet Yellen compared FTX to Lehman Brothers, whose bankruptcy filing at the beginning of the 2008-2009 global financial crisis had been the largest in U.S. history.

“It’s a Lehman moment within crypto,” she said. “Crypto is big enough that we’ve had substantial harm with investors and particularly people who aren’t very well informed about the risks that they’re taking, and that’s a very bad thing.”

Bankman-Fried said repeatedly Wednesday that he made “a pretty big mistake,” though he also said he was not involved in many decisions being made at Alameda.

“I was, you know, scared. I was nervous because of the conflict of interest about being too involved,” he said. “But I hadn’t been running Alameda, I hadn’t been thinking about its finances, I hadn’t been making those decisions.”

“I was a large owner of it. That is true. And I had a lot of exposure on that side,” he added.