Despite being ousted from the exchange he founded, Sam Bankman-Fried told CNBC in a recent interview that he is trying to close a “multi-million dollar deal to rescue FTX.” Notably, the exchange founded by Bankman-Fried filed for Chapter 11 bankruptcy protection in the United States earlier this month.
In the interview on Friday night, the FTX founder declined to give details about the downfall of his cryptocurrency empire. However, Bankman-Fried indicated that he was focused on recovering client funds and that he is still looking to secure a deal.
«I think we should try to get as much value as possible for users. I hate what happened and I deeply wish I had been more careful.Bankman-Fried said.
Likewise, Bankman-Fried said there are billions of dollars in client assets in jurisdictions “where there were segregated balances,” including in the United States.
What was once an exchange valued at over $32 billion has now become a symbol of the collapse of the crypto ecosystem.
It is important to note that the exchange’s rival, Binance, had signed a letter of intent to buy FTX’s international business. However, Binance executives decided to cancel the deal, further fueling the collapse of cryptocurrencies.
A Binance executive described the situation as if a “bomb” had gone off in digital assets.
On November 11, the FTX exchange reported filing for Chapter 11 bankruptcy protection and naming John Ray III as the new chief executive officer, whose corporate experience includes restructuring energy company Enron after its historic collapse.
Sam Bankman-Fried could play a big role at FTX
Despite losing his seat on the exchange and access to all of the company’s systems, Bankman-Fried indicated that he could play an “important role” in the next steps. However, various analysts have indicated that there is no company with a big enough risk appetite to bail out FTX.
«He is no different than any third party suitor at the moment, aside from the fact that he is a majority shareholder of FTX.». Said Adam Levitin, Georgetown University law professor and director of Gordian Crypto Advisors. «Sam Bankman-Fried could come to Delaware with an unsolicited offer and say I want to buy all creditors for one price. However, it must be pre-approved by a bankruptcy court, they cannot force a deal», he added.
Additionally, the new CEO of FTX, John Ray III, has also said that he is open to an offer to rescue the exchange.
«Based on our review last week, we are pleased to learn that many of FTX’s licensed and regulated subsidiaries, in and outside the United States, have strong balance sheets, responsible management, and valuable franchises.said John Ray III.
After reviewing the state of FTX’s financials, John Ray III said last week that he had “never seen such a complete failure of corporate controls and such a complete absence of reliable financial information” in his 40-year career. Furthermore, John Ray III added that Bankman-Fried and the top executives were “a very small group of inexperienced, unsophisticated and potentially compromised people.”
Bankman-Fried’s future hangs in the balance
Some experts are of the opinion that Sam Bankman-Fried may be seeking a ransom to reduce his own criminal liability and lessen his potential jail time.
Justin Danilewitz, a partner at firm Saul Ewing LLP, said that while the odds of someone flocking to take back FTX are “highly unlikely, given the staggering losses,” mitigating client losses could be a better-looking tactic. in the eyes of the American court.
«Often having this attitude is highly recommended if a defendant is in real trouble and the evidence is compelling.Justin Danilewitz said.
Also, some experts have compared the situation with FTX with the collapse of the broker “MF Global”, led by Jon Corzine. But back then, Corzine settled with the CFTC, neither admitting nor denying corporate misconduct.
However, this approach could also backfire for Bankman-Fried, according to Danilewitz. «This Bankman-Fried move could reflect a degree of culpability or be seen as an admission or someone taking responsibility for what happened.».
According to some experts, Bankman-Fried’s situation is comparable to that of Elizabeth Holmes, the false investor charged last Friday with 11 years in prison for fraud and fraud. This is because Holmes misled thousands of investors about the supposed efficacy of her company’s blood test technology “Theranos.”
It should be noted that even if Sam Bankman-Fried manages to play a role in recovering the funds through a bailout or somehow gains more control through a Bahamas liquidation process, he may still face numerous years of legal battles.