Billionaire Bill Ackman and Kevin O'Leary think FTX's Sam Bankman-Fried is telling 'the truth' about being unaware of major problems at his failed crypto exchange
Steve Mollman
December 1, 2022, 12:34 PM ·3 min read
FTX founder Sam Bankman-Fried has said he was largely unaware of major problems at his now-bankrupt crypto exchange, and few believe him. But two notable investors, Bill Ackman and Kevin O'Leary, appear to be in his corner.
Bankman-Fried defended himself Wednesday against accusations of fraud in an interview at the New York Times DealBook Summit, after his $32 billion exchange collapsed in spectacular fashion, shaking confidence in the cryptocurrency sector and sparking renewed calls for tighter regulation. He said he did not knowingly mix funds from the exchange with those of his trading firm Alameda—a key accusation against him.
"I didn't knowingly commingle funds," he said, describing the problem as a "failure of oversight" rather than anything malicious. "I wasn't running Alameda. I was nervous because of the conflict of interest of being too involved."
"I didn't ever try to commit fraud," he added. "I was excited about the prospects of FTX a month ago. I saw it as a thriving, growing business. I was shocked by what happened this month. And reconstructing it, there are things that I wish I had done differently…Clearly I made a lot of mistakes."
Ackman, the billionaire founder of hedge fund Pershing Square Capital Management, tweeted Wednesday: "Call me crazy, but I think @sbf is telling the truth."
O'Leary, a star of the [hotlink]TV[/hotlink] show Shark Tank, and an investor in FTX, took a similar position, tweeting: "I lost millions as an investor in @FTX and got sandblasted as a paid spokesperson for the firm, but after listening to that interview I'm in the @billAckman camp about the kid!"
Bankman-Fried resigned as FTX CEO on Nov. 11, the same day the company, along with Alameda Research, filed for bankruptcy. That followed a liquidity crunch stemming from a sort of bank run, with frantic FTX customers making $6 billion in withdrawal requests in a matter of days amid questions over the exchange's solvency.
"I think that there is a substantial discrepancy," Bankman-Fried told DealBook, "between what the financials were, what the auditing financials were, the true financials, what the exchange understood—all of that was consistent—versus what the dashboards that we had displayed for Alameda's account there, which substantially under-displayed the size of that position. That's one of the reasons that I was surprised when we dug into everything—at how big that position had become."
Last week, Mark Cuban, billionaire owner of the Dallas Mavericks, told TMZ that Bankman-Fried should be worried about prison time.
"I don't know all the details, but if I were him, I'd be afraid of going to jail for a long time," he said. "It sure sounds bad. I've actually talked to the guy, and I thought he was smart, but boy, I had no idea he was going to, you know, take other people's money and put it to his personal use. Yeah, that sure…seems like what happened."
In the U.S., federal authorities are investigating FTX, and crypto investors have sued Bankman-Fried. The lawsuit claims that he, along with celebrities he enlisted, engaged in deceptive practices and targeted "unsophisticated investors from across the country."
Fortune reached out to FTX and Bankman-Fried for comments but did not receive immediate replies.
This story was originally featured on Fortune.com
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