Sam Bankman-Fried. | Lam Yik/Bloomberg via Getty Images

The fallen crypto CEO on what went wrong, why he did what he did, and what lies he told along the way.

Last night, Sam Bankman-Fried DMed me on Twitter.

That was surprising. I’d spoken to Bankman-Fried via Zoom earlier in the summer when I was working on a profile of him, so I reached out to him via DM on November 13, after news broke that his cryptocurrency exchange had collapsed, with billions in customer deposits apparently gone. I didn’t expect him to respond — typically, people under investigation by both the Securities and Exchange Commission and the Department of Justice don’t return requests for comment.

Bankman-Fried, though, apparently wanted to talk. About how FTX and his hedge fund Alameda Research had gambled with customer money without, he claims, realizing that’s what they were doing. About who gets lauded as a hero and who’s the fall guy. About regulators. (“Fuck regulators.”) About what he regrets (“Chapter 11,” the decision to declare bankruptcy) and about what he would have done differently with FTX and Alameda (“more careful accounting + offboard Alameda from FTX once FTX could live on its own”).

It was past midnight Bahamas time, where Bankman-Fried is reportedly still located, and we went back and forth on Twitter for more than an hour. He was, he said, still working to try to raise the funding needed to pay back all his depositors.

As we messaged, I was trying to make sense of what, behind the PR and the charitable donations and the lobbying, Bankman-Fried actually believes about what’s right and what’s wrong — and especially the ethics of what he did and the industry he worked in. Looming over our whole conversation was the fact that people who trusted him have lost their savings, and that he’s done incalculable damage to everything he proclaimed only a few weeks ago to care about. The grief and pain he has caused is immense, and I came away from our conversation appalled by much of what he said. But if these mistakes haunted him, he largely didn’t show it.

(Disclosure: This August, Bankman-Fried’s philanthropic family foundation, Building a Stronger Future, awarded Vox’s Future Perfect a grant for a 2023 reporting project. That project is now on pause.)

On regulators

Before his empire collapsed, Bankman-Fried was actively engaged in lobbying in Washington for a regulatory framework for cryptocurrency. While many crypto CEOs — like Bankman-Fried’s nemesis Binance CEO Changpeng “CZ” Zhao — are openly skeptical of government regulation, Bankman-Fried has largely avoided criticizing regulators. But in our conversation, he dismissed their role. He characterized his past conciliatory statements — like when he said just last month that some amount of crypto regulation would be “definitively good” — as little more than “PR.” In doing so, he all but confirmed the view of critics who have argued that his overtures to Washington were much more about image than substance.

Kelsey Piper: you said a lot of stuff about how you wanted to make regulations, just good ones - was that pretty much just PR too? Sam Bankman-Fried: there’s no one really out there making sure good things happen and bad things don’t; usually there’s only one toggle—do more or do less. yeah just PR; fuck regulators; they make everything worse; they don’t protect customers at all.

Kelsey Piper: does seem like some kind of consumer protection would be good tho? like maybe regulators can’t deliver it, but sure does look like consumers lose their shirts a bunch Sam Bankman-Fried: agreed on both; it would be good. but regulators can’t do it
Kelsey Piper: and you couldn’t do it, and CZ sure isn’t doing it, so...who? Sam Bankman-Fried: they can’t actually distinguish between good and bad; just ‘do more business’ vs ‘do less business’ and ‘put up more moats’ vs ‘put up fewer moats’; no one will but you want to know the truth? no one’s doing it in the rest of finance, either
Sam Bankman-Fried: or, for that matter, other areas that are regulated; the FDA isn’t helping the giant Crackdown on Big Tech has no point or goal or philosophy behind it; OFAC is slowly undermining US interests globally and is the single biggest threat to the US being a suprepower ESG has been perverted beyond recognition Kelsey Piper: I’m sort of putting together a picture where - you don’t believe anyone is doing anything for good reasons, you don’t believe the “good guys” are good
Sam Bankman-Fried: what we’re left with, at the end of the day, is: “only the rich can inest; only they can make or lose money.” eh there’s *some* truth to it—but it’s *also* true that I didn’t want to do sketchy stuff, there are huge negative effects from it. and I didn’t mean to. each individual decision seemed fine and I didn’t realize how big their sum was until the end.

On being willing to behave unethically

One question on which I’ve seen widespread speculation is whether Bankman-Fried thought it was okay to do unethical things “for the greater good” — a position that hardcore utilitarians, which Bankman-Fried has identified as in the past, might hold.

That question happens to be one I had asked him in the interview this summer, which I had just relistened to the night before our Twitter conversation. At the time, of course, I thought the ethical dilemma where Bankman-Fried had perhaps crossed a line was whether it was acceptable to run a cryptocurrency exchange in the first place — and whether the good he claimed he meant to do made it okay.

A lot of people, I said to Bankman-Fried in that earlier interview, would think of “starting a crypto company to make billions of dollars the way I would think of starting a tobacco company to make billions of dollars: deeply immoral. Presumably, there’s some line where you shouldn’t do something that bad even for good reasons. I’m curious whether you think there’s some line? And if so, where would you draw that line?”

“There is some line,” he told me then. “The answer can’t be there is no line. Or else, you know, you could end up doing massively more damage than good. And I think more generally, you could say, okay, fine, but just, like, subtract that out. But I don’t think it’s that simple, either. Because there are a lot of complicated but important second-order harms that come if your core business is bad for the world, in terms of your ability to work with partners and your ability to work with partners in your philanthropic efforts.

“You could imagine that if the Philip Morris Foundation had really good ideas about how to improve the world, they probably would still have a really hard time working with the Gates Foundation. So I do think it’s more complicated than that. And you have to seriously contend with what the impact is of your direct work.”

I returned to those questions in our Twitter conversation. Those well-considered ideas about balancing ethical imperatives? “It’s not true, not really,” he said now.

Kelsey Piper: I was just relistening to that conversation we had this summer about whether you should do unethical shit for the greater good Sam Bankman-Fried: what did I say Kelsey Piper: you were like, nah don’t do unethical shit, like if you’re running Philip Morris no one’s going to want to work with you on philanthropy Sam Bankman-Fried: heh Kelsey Piper: and there’s a risk of doing more harm than good, but even if you subtract that out, pretty not worth it Sam Bankman-Fried: yeah
Kelsey Piper: I was trying to figure out like - if that was kind of the PR off the cuff answer Sam Bankman-Fried: man all the dumb shit I said it’s not true, not really Kelsey Piper: yeah I thought it might not be Sam Bankman-Fried: everyone goes around pretending that perception reflects reality. it doesn’t. some of this decade’s greatest heroes will never be known, and some of its most beloved people are basically shams.

Kelsey Piper: so you kinda don’t believe in, like, ‘doing unethical shit’, as anything other than a judgment we bestow upon the losers? Sam Bankman-Fried: a month ago CZ was a walking example of “don’t do unethical shit or your money is worthless.” now he’s a hero. is it because he’s virtuous? or because he had the bigger balance sheet, and so he won Kelsey Piper: well I can see why you didn’t give that answer in interviews Sam Bankman-Fried: heh

Kelsey Piper: so the ethics stuff - mostly a front? people will like you if you win and hate you if you lose and that’s how it all really works? Sam Bankman-Fried: yeah. I mean that’s not *all* of it. but it’s a lot. the worst quandrant is “sketchy + lose.” the best is “win + ???.” “clean + lose” is bad but not terribel

Kelsey Piper: you were really good at talking about ethics, for someone who kind of saw it all as a game with winners and losers Sam Bankman-Fried: ya. Hehe. I had to be. it’s what reputations are made of, to some extent. I feel bad for those who get fucked by it, by this dumb game we woke westerners play where we say all the right shiboleths and so everyone likes us.

On bending the truth

Bankman-Fried has maintained that FTX has never invested the deposits of crypto account holders on the exchange. I pressed him on that point via Twitter, and while he continued to insist that FTX did not directly use account money in this way, he said that Alameda — which he also owns — had borrowed far more money from FTX’s balance sheet for investments than he had realized, which ultimately left FTX vulnerable to the crypto equivalent of a bank run.

Why didn’t Bankman-Fried realize what was happening until it was too late? “Sometimes life creeps up on you,” he said.

Kelsey Piper: you tweeted out some stuff like - we never invest your deposits. that was bs, right? Sam Bankman-Fried: it was factually accurate Kelsey Piper: huh!!! but like - their deposits were totally not there? or do you just mean, technically it was Alameda Sam Bankman-Fried: FTX. correct

Kelsey Piper: so....FTX technically wasn’t gambling with their money, FTX had just loaned their money to Alameda, who had gambled with their money, and lost it? and you didn’t realize it was a big deal because you didn’t realize how much money it was? SBF: and also thought Alameda had enough collateral to reasonable cover it KP: I get how you could have gotten away with it but I guessthat seems sketchy even if you get away with it SBF: It was never the intention Sometimes life creeps up on you

On what happened

One theory is that the seeds of FTX’s downfall were sown earlier this year, when Alameda reportedly took huge losses after the crypto company Terra’s LUNA stablecoin collapsed. Bankman-Fried said he didn’t realize the extent of the problem because of “messy accounting” — albeit messy accounting to the tune of billions of dollars.

Kelsey Piper: was the Alameda thing when LUNA crashed the first time customer deposits got lent out (that’s what people are saying) or was it more like, the accounting was such that a lot of the stuff you were doing was implicitly backed by customer deposits? Sam Bankman-Fried: messy accounting + margin exchange —> position built up over time, though in retrospect LUNA crash was when a lot of it did. but messy accounting —> I didn’t realize full size of it until a few weeks ago

KP: if you could do it all over again, would you just take more careful accounting? never touch customer funds? never go into crypto? SBF: more careful accounting + offboard Alameda from FTX once FTX could live on its own KP: are there people who told you to be more careful? are there people you would’ve listened to? SBF: it’s odd. I mean, maybe? but not really, and those who did—they did on other things, not that. it’s odd.
SBF: everyone was so worried and concerned about dumb shit we definitely wouldn’t do and that made no sense KP: but not about whether you were lending out customer funds? seems like such an obvious thing for them to worry about! SBF: ya but it’s complicated: it wasn’t quite lending them out—it was messier and more organic than that; each step was in isolation rational and reasonable, and then when I finally added it all up last week it wasn’t b) most exchanges did some variant on what we did
Kelsey Piper: if you could do it all over again, would you just take more careful accounting? never touch customer funds? never go into crypto? Sam Bankman-Fried: more careful accounting + offboard Alameda from FTX once FTX could live on its own. Kelsey Piper: are there people who told you to be more careful? are there people you would’ve listened to? Sam Bankman-Fried: it’s odd. I mean, maybe? but not really, and those who did—they did on other things, not that. it’s odd

On what he regrets

Bankman-Fried acknowledged that he “fucked up. Big. Multiple times.” But he also insisted that much of the trouble could have been avoided if FTX had not declared bankruptcy, which has largely taken financial matters out of his control. (During the process, Bankman-Fried was replaced as CEO of FTX by John J. Ray III, a lawyer who helped creditors recover billions of dollars after the bankruptcy of the energy trading firm Enron.) “The people in charge of [the company] are trying to burn it all to the ground out of shame,” he told me.

Bankman-Fried argues he should instead have kept trying to raise more money, and insisted that if he’d just done that, “withdrawals would be opening up in a month with customers fully whole.” The Wall Street Journal reported earlier this week on Bankman-Fried’s efforts to find funding and found no indication any investors were committing. Even if fresh funding were obtained, the paper continued, it would require negotiations with FTX creditors and the approval of the bankruptcy court.

While he said that some of his colleagues — co-founder Gary Wang and director of engineering Nishad Singh — were “scared,” and, in the case of Singh, “ashamed and guilty,” Bankman-Fried seems to maintain some emotional distance from the collapse: “The world is never so black and white.”

SBF: I fucked up big multiple times you know what was maybe my biggest single fuckup? KP: oh? SBF: the one thing *everyone* told me to do everthing would be ~70% fixed right now if I hand’t KP: I’m trying to guess but I have no idea 9SBF: chapter 11
KP: like, should’ve just rode it out and kept trying to make the $8billion back? SBF: if I hadn’t done that, withdrawals would be opening up in a month with customers fully whole but instead I filed, and the people in charge of it are trying to burn it all to the ground out of shame I might still get there  1 but after way more collateral damange and only 50/50 KP: I’d take the under on that

SBF: basically we get there if both: a) EITHER Gary OR Nishad comes back b) we can win a jurisdictional battle vs Delaware KP: Gary and Nishad are gone? SBF: yea, scared or gary is scared, nishad is ashamed and guilty KP: ashamed and guilty because all the customer deposits are gone? SBF: yea

Kelsey Piper: people I’ve talked to have said Nishad was much more into the ethics/not being sketchy stuff than you were Sam Bankman-Fried: yeah. it hit him hard. I mean it hit all of us hard but it hit him HARD. Kelsey Piper: it seems like you have more of a - sense of yourself to fall back on, more of a sense that you are only wrong if you lose and he was more like “wow we stole money from people who trusted us” Sam Bankman-Fried: the world is never so black and white

On the hack of FTX

Shortly after FTX filed for bankruptcy, watchers of blockchain transactions noticed someone had transferred hundreds of millions of dollars out of the company. I asked Bankman-Fried what was up.

Kelsey Piper: do you know what’s actually up with the money that got mysteriously moved out of FTX after the bankruptcy? that’s the other thing a lot of people are speculating about SBF: hack —   either ex-employee, or malware on an ex-employee’s computer; a few hundred M

On what’s next

Bankman-Fried says his No. 1 priority now is to try to raise $8 billion to make account holders whole. “That,” he told me, is “basically all that matters for the rest of my life.” But while he said that “a month ago I was one of the world’s greatest fundraisers,” that $8 billion dwarfs what FTX was able to raise so far, there’s no indication any investors would bite, and even if he could secure funding, it would likely require both creditors and the bankruptcy court to get on board.

Kelsey Piper: what’s next, what’s your plan? SBF: I have 2 weeks to raise $8B. that’s basically all that matters for the rest of my life KP: well, I really hope that the depositors get the money back, but I gotta say, I have no idea how anyone could possibly pull that off from this starting point SBF: well a month ago I was one of the world’s greatest fundraisers now I’m the fallen wreckage of one but there’s a thing about being fallen— there are people who know what that’s like

This morning, I emailed Bankman-Fried to confirm he had access to his Twitter account and this conversation had been with him. “Still me, not hacked! We talked last night,” he answered.

His lawyers did not return a request for comment.