Sam Bankman-Fried says he didn’t build a backdoor to access FTX customer funds because he doesn’t “know how to code”
On November 12, several media outlets including Bloomberg and Reuters reported that disgraced FTX founder Sam Bankman-Fried (SBF)secretly moved $10 billion to Alameda Research using a “backdoor” he built into FTX software without alerting external auditors.
The backdoor, known only to his most trusted lieutenants, allowed Alameda to withdraw crypto deposits without triggering internal red flags, Bloomberg reported, citing two sources familiar with the matter.
Other sources also told Reuters the “backdoor” allowed Bankman-Fried to execute commands that could alter the company’s financial records without alerting other people, including external auditors. “This setup meant that the movement of the $10 billion in funds to Alameda did not trigger internal compliance or accounting red flags at FTX,” Reuters reported, citing the two sources. However, Bankman-Fried denied implementing a “backdoor” in his text message to Reuters.
Fast forward about three weeks later. Bankman-Fried has come out to deny the reports. In a phone-call interview with Tiffany Fong, Sam Bankman-Fried said the allegation that he built a secret backdoor to move customers’ funds to FTX’s sister company Alameda Research is “completely not true.”
During the interview, Tiffany also raised the question about Reuters’ report regarding the secret backdoor.
Tiffany Fong: “There’s something about a back door that allowed you to execute commands that could alter the company’s Financial records without alerting others this was put in place I think that was a Reuters article which made it seem like you secretly were moving money in the background,”
Bankman-Fried: “Well that’s interesting. So that I can tell you it is definitely not true. I don’t even know how to code. It’s the honest embarrassing answer. I certainly wasn’t like building some back door in this system. I could barely use the system. I’m not that doctor I knew this is I knew this system from a user interface perspective.”
Bankman-Fried is scheduled to speak tomorrow at an exclusive conference called DealBook Conference on November 30 hosted by the New York Times alongside Ukrainian President Volodymyr Zelensky and US Treasury Secretary Janet Yellen.
Meanwhile, there were other reports that FTX was hacked overnight and at least $1 billion of customer funds have vanished from collapsed crypto exchange FTX, Reuters stated, citing two people familiar with the matter.
As we reported earlier, the Bahamas Securities Commission (BSC) froze the assets of FTX Digital Markets “and related parties.” The BSC has also appointed a provisional liquidator as the agency seeks to place FTX into receivership, i.e. bankruptcy, the agency said in a statement issued late on Thursday.
Bankman-Fried first came into the spotlight in 2020 after he donated a whopping $5.2 million to Joe Biden’s campaign, making him the second-biggest donor.
Bankman-Fried founded FTX in 2019 with his co-founder Gary Wang. The Bahamas-based crypto exchange FTX offers derivatives products like futures and options as well as spot trading. Once an unknown startup, FTX has become a key player in the crypto space, rivaling the likes of Coinbase and Binance.