On April 27, Skybridge founder Anthony Scaramucci revealed what the final days of FTX were like, claiming that most employees of the failed crypto exchange probably didn’t know what its executives were doing behind closed doors until it was too late.
In a panel discussion called “FTX: What Happened?” at Consensus 2023, Scaramucci gave a detailed narrative of what happened from his perspective. The Skybridge founder said he remembers hearing that FTX CEO Sam Bankman-Fried had commented negatively about Binance CEO Changpeng Zhao, also known as “CZ.”
Scaramucci claimed that CZ responded by selling his share of FTX Tokens. However, CZ’s stated reason for unloading FTX Tokens was “post-exit risk management,” likely because he reviewed a leaked balance sheet of the company showing a concerning connection between FTX and sister company Alameda Research. However, Scaramucci was emphatic in stating that CZ did not cause the bankruptcy of FTX, explaining:
“If Sam was running the business appropriately […] The business would have been fine […] Some people have got on a stage like this and said, “Well CZ put Sam out of business.” No, no. Sam put Sam out of business by the way he ran that business.”
Scaramucci said that on Nov. 6 or 7, he had just returned from giving a speech in Florida. After speaking to Bankman-Freid’s father, he learned that there was some kind of liquidity problem at FTX. He thought the exchange had the assets to repay depositors but that these assets could not be sold quickly, threatening to force the exchange to halt withdrawals.
Scaramucci wanted to help the exchange, he said. But “later in the evening, that number went from 1 billion to 4.5 billion,” referring to the dollar amount of the liquidity shortfall. This convinced him that something more serious was going on at the exchange. He immediately booked a flight to The Bahamas to visit FTX headquarters and discover what was happening. When he arrived, “The war room was despondent, and I would say that it was clear to a few people that there was a very small group of people that had done some things that they didn’t let the other people into,” he explained.
Related: FTX sells Ledger X for $50M to affiliate of Miami-based exchange holding company
Scaramucci said the collapse of FTX was an example of why frauds are almost always committed by a small group of people:
“The way crimes get committed is they get committed by very small groups. It’s very hard to commit a crime like this with a large group of people because what you learn about psychology and sociology, there’s always a person of conscience that comes out and says, “Hey, I don’t want to do this.””
Scaramucci implied that FTX was a fraud and not merely the victim of liquidity crises brought on by market events, stating:
“Three of those four people have already pled guilty. So, guys, when the windows open and you hear clippity clop outside, it’s a horse. It’s not a zebra […] It’ll be very interesting to see how Sam makes a decision on his own plate.”
FTX filed for bankruptcy in November. Two of its executives, Gary Wang and Nishad Singh, have pled guilty to fraud, along with Caroline Ellison, the former CEO of Alameda Research. Bankman-Fried has also been charged with fraud. However, he has pleaded not guilty and claims that some of the money lost can be recovered.