Sam Bankman-Fried’s Written Testimony Notes Dec 12, 2022, is part of
This is part 6 of 11.
Feature Image: HackerNoon’s Midjourney AI, prompt “hustle porn”
For the above to go wrong, I, as CEO of FTX, had to make a number of significant mistakes.
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I believe that the thread that most ties them together is that, for much of 2022, I was less grounded in operational details than I had been before.
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I had prided myself on staying grounded: staying in the weeds, day to day, of the company.
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But by mid 2022, I believe I was spending, approximately:
- 25% of my time talking with regulators and policymakers in DC and beyond
- 25% of my time on branding and new pathways for FTX, including remittances, financial settlement, and sports partnerships
- 25% of my time managing FTX’s growing workforce
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Together, those were maybe 25% of my time in 2020, but by 2022 they were closer to 75%. That’s time that wasn’t spent focusing on the actual core product, including risk management.
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I also prided myself on having a strong work ethic; I began FTX by routinely working 18 hour days. But for much of 2022, I believe that I was working about 30% less than I was used to. And even when I was working, I was less focused and disciplined than I used to be.
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I thought that I could hold FTX together despite the expansion. I was wrong. I bit off more than I could chew, and ended up failing to focus on risk management.
I deeply regret what happened, and I would give anything to be able to go back and put in place the detailed oversight and risk management that I should have.
Right now I’m focusing on what I can do to make customers whole, and reflecting on what I did wrong. There are a number of things I wish I had done. Among those:
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I wish that I had operated FTX International with a consistently high degree of transparency–to myself, and our employees, and customers, and regulators.
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We were transparent about market data and access and fees and many other things
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We were not transparent–even internally, even to ourselves–about assets, and margin, and positions, and risk.
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I wish that I had ensured we built out public monitors that displayed:
- Total client balances
- Total blockchain balances, and the corresponding addresses
- Total bank and fiat balances that were in FTX’s name
- Total bank and fiat balances that were in a payment processor’s name
- Total margin position size, and total futures position size, and the amount and types of collateral that were utilized to support those
- The treatment of margin and risk on all accounts
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I wish that we had deployed:
- Public API endpoints to pull the above data
- Private API endpoints that served anonymized versions of account balances and risk to regulators for oversight
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I wish that, when the cracks began to show, I had communicated openly with our employees, users, and community, rather than freezing up and remaining mostly quiet per lawyers’ instructions as people wondered what was happening.
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I wish I had not clicked on a button on Docusign at 4:30 am, leaving some of FTX under destructive leadership. And I deeply regret not taking the advice of employees and supporters who knew what Chapter 11 would mean for customers. I received a call from a regulatorily experienced advisor who I deeply trust and respect, shortly before 4:30 am, imploring me not to do it. What they said felt correct to me. I talked with my counsel, who strongly pushed back. In retrospect I can confidently say that they were right and my (now ex) counsel was wrong.
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And more than anything else: I wish that I had remained grounded, and spent at least as much time focusing on and safeguarding user assets and risk as I did on branding and partnerships.
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