Sam Bankman-Fried Describes Fearing ‘Run on the Bank’ Before FTX Collapse in November of Last Year: Report
The disgraced former CEO of the bankrupt crypto exchange FTX is testifying in his own fraud trial against the US government.
In court transcripts recorded by Inner City Press, Sam Bankman-Fried (SBF) recounts the day that Binance’s Changpeng Zhao (CZ) tweeted that the world’s largest crypto exchange by trading volume was liquidating all of its FTX Token (FTT).
“Cohen (SBF’s lawyer): Let’s go to Nov 6.
SBF: It’s [a tweet] from CZ.
Cohen: He wrote, we are liquidating FTT on our books, yes?
SBF: Yes. I discussed with Caroline [Ellison] whether we should send a tweet in response. Customer withdrawal grew to $1 billion on Nov 6. I was concerned.”
According to SBF, the tweet gave him cause for concern about a bank run, or that many depositors would withdraw their money simultaneously because they fear FTX may fail. Though SBF claims a tweet in response to CZ was meant to help, it appears the damage was already done.
“SBF: I was concerned about a run on the bank.
Cohen: What is that?
SBF: Say you have a bank – …
Cohen: How did you respond?
SBF: Caroline sent a tweet, that we would buy FTT at $22
Cohen: Nov 7, what did you observe as to withdrawals?
SBF: They increased. On Nov 7, $4 billion of net withdrawals, 100 times an average day. We might be in a liquidity crisis.”
Bankman-Fried also reiterates that FTX did not invest customer assets.
“Cohen: You tweeted that ‘assets are fine.’ What did you mean?
SBF: My view was that the exchange was OK, no hole in terms of assets.
Cohen: You said here, FTX will continue to process withdrawals…
SBF: FTX did no investment with customer assets.”
Last week, SBF decided to testify in court after his colleagues took the witness stand to provide damning evidence against him.
Inner City Press reported that Bankman-Fried’s lawyer stated that his client would testify after the defense’s three witnesses in order to rebut statements made by employees of FTX.
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