FTX founder Bankman-Fried denies fleeing to South America amid crypto collapse
FTX filed for Chapter 11 bankruptcy protection Friday
D.A. Davidson director of research Gil Lauria and Duke Financial Economics Center policy director Lee Reiners debate the case for cryptocurrency as the FTX crisis continues to unfold on 'The Claman Countdown.'
FTX founder Sam Bankman-Fried denied speculation on Twitter that he had flown to South America after the cryptocurrency exchange filed for bankruptcy.
When asked whether he had flown to Argentina, as rumors swirled on social media, the former chief executive told Reuters via text message that he was in the Bahamas, where the company is headquartered.
Bankman-Fried, 30, served as the CEO until Friday.
He also denied "secretly" transferring $10 billion of customer funds from FTX to his trading company Alameda research and denied implementing a "backdoor" in FTX's bookkeeping system.
INSIDE THE COLLAPSE OF CRYPTO EXCHANGE FTX: EVERYTHING YOU NEED TO KNOW
Sam Bankman-Fried, founder and chief executive officer of FTX Cryptocurrency Derivatives Exchange, speaks during the Institute of International Finance (IIF) annual membership meeting in Washington, DC, US, on Thursday, Oct. 13, 2022. (Photographer: Ting Shen/Bloomberg via Getty Images / Getty Images)
"We had confusing internal labeling and misread it," he said of the $10 billion transfer.
Reuters reported, citing two people familiar with the matter, that at least $1 billion of customer funds had disappeared, with records revealing the financial hole.
When asked about the missing funds, Bankman-Fried responded: "???"
In a release, FTX said John J. Ray III had been appointed CEO in his stead.
Also on Saturday, FTX said that it was moving funds into offline storage after reporting "unauthorized transactions."
Analysts said millions of dollars worth of assets had been withdrawn from the platform.
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This illustration photo shows a smart phone screen displaying the logo of FTX, the crypto exchange platform, with a screen showing the FTX website in the background in Arlington, Virginia on Feb. 10, 2022. (OLIVIER DOULIERY/AFP via Getty Images / Getty Images)
"Following the Chapter 11 bankruptcy filings – FTX US and FTX [dot] com initiated precautionary steps to move all digital assets to cold storage. Process was expedited this evening – to mitigate damage upon observing unauthorized transactions," FTX U.S. general counsel Ryne Miller tweeted.
Cold storage refers to crypto wallets that are not connected to the internet to guard against hackers.
Miller had previously written that FTX was "investigating abnormalities with wallet movements related to consolidation of FTX balances across exchanges," although noting that facts were unclear "as other movements [were] not clear."
Sam Bankman-Fried, founder and chief executive officer of FTX Cryptocurrency Derivatives Exchange, speaks during a Senate Agriculture, Nutrition and Forestry Committee hearing in Washington, D.C., Feb. 9, 2022. (Sarah Silbiger/Bloomberg via Getty Images / Getty Images)
This all comes after the Bahamas-based FTX – formerly the world's third-largest crypto exchange – filed for Chapter 11 bankruptcy protection.
A rescue deal with rival exchange Binance, who had briefly agreed to step in, fell through.
Binance cited red flags that came up during the due diligence process.
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"I f---ed up, and should have done better," Bankman-Fried tweeted in a lengthy thread on Thursday.
As of 2019, FTX had more than 1 million users.
Fox Business Digital's requests for comment from Bankman-Fried and FTX were not immediately returned.
FOX Business' Megan Henney and Reuters contributed to this report.