In a recent interview, Sam Bankman-Fried states that he has not built a backdoor to access FTX clients’ funds because he does not “know how to code.”
We were almost becoming accustomed to silence from the former CEO, but this time he decided to open up in an interview, posted on Youtube, and tell his side of the story.
FTX founder denies $10 billion transfer via “backdoor”
At the time of FTX’s crisis, shortly before the exchange imploded, several media outlets including Bloomberg and Reuters reported to the world that the cause that had put FTX in crisis, depended on some financial statements that showed inconsistencies.
The financial statements showed that to compensate for a lack of liquidity, Sam Bankman Fried had secretly transferred $10 billion, from FTX to Alameda Research, using a “backdoor” that he built into the FTX software.
The backdoor, known only to his executives, allowed Alameda to withdraw the crypto deposits without anyone’s knowledge.
After three weeks, Sam Bankman Fried came out of the woodwork to shed light on the issue. The former FTX CEO granted his first phone interview to Tiffany Fong, where he denies the existence or creation of a backdoor to move client funds from FTX to Alameda Research.
In the interview, he calls this allegation made by the media “completely false.”
To Tiffany Fong‘s question regarding the secret backdoor and Sam Bankman Fried’s involvement with Reuters, the former FTX CEO responds as follows:
“Well, it’s interesting. So I can tell you that it’s absolutely not true. I don’t even know how to program. That’s an honest and embarrassing answer. I certainly don’t know how to build a backdoor into this system. I could barely use the system. I’m not able because I didn’t know this system from the user interface point of view.”
Therefore, Sam Bankman Fried, in his own words, did not create a secret “backdoor” to transfer money from FTX to Alameda Research. The motivation lies in his programming skills. Indeed, he explains that he would not have been able to program such code to transfer the money.
Sam Bankman Fried and the situation with his lawyers
The lawyers of the now-former CEO of FTX, had already explained that they were not at all happy with the statements made by Sam Bankman Fried in interviews. His decision to speak out shortly after the collapse of his companies could prove dangerous for the upcoming trials that would follow.
During the call with Tiffany Fong, Bankman-Fried explained why he reopened withdrawals only for residents of the Bahamas, where Bankman-Fried and FTX are based. Initially, FTX said this was to comply with requests from Bahamian regulators:
“I gave (the Bahamian government) a day’s warning that we would do it. They didn’t say, yes or no. They didn’t respond, and then we did it. The reason I did it was because it was critical for the exchange to be able to have a future.”
Bankman Fried’s idea was to save FTX, starting with the Bahamas first. As we have said repeatedly, the Bahamas is the home of FTX and the residence of Sam Bankman Fried.
The country is full of people who have invested in FTX and now find themselves in the unfortunate situation of not being able to withdraw. The unblocking of Sam Bankman Fried’s temporary withdrawals, was intended to placate and calm the investors in which he and his company presided.
Thus he explained in his interview.
The former CEO of FTX ties to politics under scrutiny
Bankman-Fried was a major donor in the last US midterm elections, held in early November. While previously the relationship with politics could be considered cozy, almost benign on his part, now it has come under intense scrutiny in recent weeks as it became clear that his business empire may have been a fraud.
During the 2022 election cycle, Bankman-Fried personally donated more than $13 million to a dozen candidates and political organizations. Most of these donations were directed to the Democratic Party.
Bankman-Fried’s right-hand man, Ryan Salame, has also been active in financing US elections. This time around, his $24 million donations went mainly to the Republican Party.
Both former FTX executives were also involved in political action committees (PACs). Sam Bankman-Fried’s PAC gave $23 million to Democrats, while Ryan Salame’s PAC gave over $12 million to Republicans.
At the moment, these considerable donations, mainly those received by Democrats who won the Midterm elections, are causing a serious wave of controversy and conspiracy theories. In the interview with Fong, Sam Bankman Fried explained that it was not only the Democratic Party that benefited from his donations, but Republicans also received several “secret” donations not known to the spotlight.
As can be inferred from the “impartiality” of the now-former CEO of FTX, on the verge of bankruptcy, the hidden motive of these donations was to curry political goodwill.
As we know, cryptocurrency regulation is a very important issue in American politics today. We can therefore understand why a character like Sam Bankman Fried needed the sympathy of the politicians who won the Midterm elections.
The Daily Beast interviewed 26 US legislators, both Democrats and Republicans. The question was whether they would keep the contributions made by FTX-related organizations. Two politicians, Dick Durbin and Chuy Garcia, said they would give the money to charity. Similarly, David Schweikert intends to return donations “if the person who made an individual contribution did something wrong.”
Ruben Gallego, on the other hand, opted for a different approach. He says he used Bankman-Fried funds to support Andrea Salinas, a Democratic candidate whom the former CEO had bitterly opposed with millions of dollars.
Other political figures, such as Lucy McBath and Salud Carbajal, preferred not to respond.