FTX founder knew ‘basically nothing’ about crypto when started his business

FTX Exchange and Alameda Research founder — Sam Bankman-Fried (SBF) — spoke for the first time as a witness in his criminal fraud trial on October 27. Among the revelations, Bankman-Fried admitted he “knew nothing” about cryptocurrencies when he started Alameda in 2017.

SBF’s testimony was covered live by CNN Business for approximately seven hours. According to the coverage, Sam knew “basically nothing” about crypto when he decided to found Alameda Research in 2017.

“I had absolutely no idea how they worked…I just knew they were things you could trade. There was a ton of excitement, a ton of demand…”

— Sam Bankman-Fried (SBF)

Notably, FTX just came two years later, in 2019, with the main goal of creating a more trading-friendly platform that could be offered for sale to Binance. His plans changed when the number of customers started to increase.

“I thought there was maybe a 20% chance of success and an 80% chance it would shut down after a few months. Even that 20% chance was a huge opportunity, given that the biggest exchanges at the time were multibillion-dollar companies.”

— Sam Bankman-Fried (SBF)

Hedging: SBF was worried about Alameda’s management team skills

Interestingly, Bankman-Fried wrote a memo two months before Alameda Research’s collapse, suggesting it should shut down operations due to “serious risks” for the company.

“Alameda might be roughly insolvent. (…) I was worried Alameda might go bankrupt.”

— Sam Bankman-Fried (SBF)

During his testimony, the founder recalled he was worried about the lack of hedging strategies by Alameda’s CEO, Caroline Ellison, in case of a market crash. Caroline had previously mentioned how Sam was “freaking out about hedging” back then as if he was worrying too much about something irrelevant.

Curiously, when asked about his personal style, the FTX founder explained he was “kind of busy and lazy.”

SBF will be again in front of the jurors on October 30 to continue his testimony.