Anthony Scaramucci, the founder of SkyBridge Capital, disclosed on April 27 what the final days of FTX were like, claiming that the majority of the exchange’s employees were likely unaware of what its executives were doing behind closed doors until it was too late.
During a panel titled “FTX: What Happened?” at Consensus 2023, Scaramucci provided a comprehensive account of what transpired from his perspective.
The founder of SkyBridge recalled hearing that FTX CEO Sam Bankman-Fried had made disparaging remarks about Binance CEO Changpeng “CZ” Zhao.
Scaramucci stated that CZ’s response was to sell his FTX tokens.
However, CZ’s stated reason for selling FTX tokens was “post-exit risk management,” most likely because he examined a leaked balance sheet of the company that revealed a troubling relationship between FTX and sister company Alameda Research. 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 was adamant that CZ did not cause FTX’s bankruptcy, stating that he had just returned from Florida after giving a speech on November 6 or 7.
After communicating with Bankman-Freid’s father, he learned that FTX was experiencing a liquidity issue.
He believed that the exchange had the assets to repay depositors but that these assets could not be sold quickly, posing the threat that the exchange would be forced to cease withdrawals.
He stated that Scaramucci wished to facilitate the exchange.
However, “later in the evening, that number went from 1 billion to 4.5 billion,” referring to the dollar value of the liquidity deficit.
This convinced him that the exchange involved something more serious. He immediately scheduled a flight to the Bahamas to visit the FTX headquarters and find out what was going on.
When he arrived, “the war room was despondent, and it was clear to a few people that a small group of people had done things that they didn’t share with the rest of the team,” he said.
Scaramucci stated that the failure of FTX was an illustration of why forgeries are almost always perpetrated by a small group of individuals:
“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 simply a victim of liquidity crises caused by market events when he stated, “FTX filed for bankruptcy in November.” 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.”
Two of its executives, Gary Wang and Nishad Singh, along with the former CEO of Alameda Research, Caroline Ellison, have pleaded guilty to fraud.
Additionally, Bankman-Fried has been accused of fraud. However, he has entered a not-guilty plea and asserts that a portion of the stolen funds can be recovered.