SBF replied to my private message, and I decided to make the conversation public

Source: vox

Original Author: Kelsey Piper

Translation: Katie, Odaily Planet Daily

I had a conversation with SBF over Zoom earlier this summer while I was writing his profile. So on November 13, when news broke that his cryptocurrency exchange had collapsed and billions in customer deposits had vanished, I reached out to him via Twitter DM. I didn't expect him to respond—typically, someone under investigation by the SEC (U.S. Securities and Exchange Commission) and the U.S. Department of Justice wouldn't reply at all.

After contacting SBF, he clearly wanted to talk. Regarding how FTX and his hedge fund Alameda Research gambled with customer money, he claimed they didn't realize what they were doing. They didn't understand who would be praised as a hero and who would become a scapegoat. He also discussed regulatory issues, things he regretted (the Chapter 11 bankruptcy decision), and how he would have treated FTX and Alameda (more cautious bookkeeping; separating Alameda once FTX could survive independently).

It was past midnight in the Bahamas, and we chatted back and forth on Twitter for over an hour. SBF stated he was still working hard to raise the funds needed to repay all depositors.

As we communicated, I tried to understand what SBF truly believed was right and wrong behind the public relations, charitable donations, and lobbying, especially regarding the ethics of the work he was involved in and the industry he was in. Our entire conversation had to contend with the backdrop that those who trusted him had lost their savings, and he had caused immeasurable damage to the initial promises he made. After our conversation, I was shocked by many of the things he said.

(Odaily Planet Daily Note: SBF also mentioned a private DM conversation with "a friend" (i.e., Kelsey Piper) in his latest "reflection post.")

On Regulation

Before the collapse of SBF's crypto empire, he was actively involved in lobbying in Washington to establish a regulatory framework for cryptocurrencies. While many crypto industry CEOs, like Binance's Changpeng Zhao, publicly questioned government regulation, SBF largely avoided criticizing regulators. He described his past statements—like saying last month that some degree of cryptocurrency regulation "is absolutely good"—as a "public relations issue." In doing so, he almost confirmed critics' views that his overtures to Washington were superficial rather than genuine.

SBF Willing to Do Unethical Things

There is a question many people are speculating about—does SBF believe it is acceptable to do unethical things "for the greater good"? This is a position that a self-proclaimed utilitarian might hold.

This question happened to be one I asked him during my interview with him earlier this summer, and the night before our Twitter conversation, I had just re-listened to that interview.

At that time, I thought SBF faced a moral dilemma about "crossing the line"—whether running a cryptocurrency exchange was the right choice from the start and whether the good he claimed he wanted to do could justify it.

In the earlier interview, I told SBF, "Many people would think that starting a cryptocurrency company to make billions is as unethical as starting a tobacco company to make billions. Suppose there is a line that you cannot cross, even with good reasons. I'm curious if you think there is a bottom line? If so, where is your bottom line?"

SBF replied, "There is indeed a bottom line; the answer cannot be that there is no bottom line. Otherwise, the harm you might ultimately cause could far outweigh the benefits. But the bottom line is not so easy to define. Because if your core business is harmful to the world, there will be many complex but serious secondary harms (like affecting partnerships)."

In our Twitter conversation, I asked him again about his views on moral boundaries. In the summer interview, SBF believed that one should not act unethically for the sake of a so-called right cause. However, in this Twitter conversation, SBF completely denied those moral statements he made earlier, admitting that what he said at the time was not sincere.

On Distorting Facts

SBF insists that FTX never invested the deposits of cryptocurrency account holders in the exchange. I pressed him on this via Twitter, and although he continued to assert that FTX did not directly use account funds in this way, he said that Alameda borrowed much more money from FTX's balance sheet for investments than he realized, which ultimately made FTX vulnerable to a bank run-like shock from cryptocurrencies.

Why did SBF only realize what was happening when it was too late? He said, "Sometimes life creeps up on you."

What Really Happened

There are claims that the seeds of FTX's downfall were sown earlier this year when Alameda reportedly suffered massive losses after the collapse of the cryptocurrency company Terra's LUNA stablecoin. SBF said he did not realize the severity of the problem due to "a terrible, chaotic bookkeeping method"—chaotic bookkeeping amounting to billions of dollars.

SBF's Regrets

SBF admits he "messed up." But he also insists that many troubles could have been avoided if FTX had not declared bankruptcy. Bankruptcy has largely taken the funding issues out of his control. (In the process, SBF's CEO position was taken over by John J. Ray III, a lawyer who helped creditors recover billions after the bankruptcy of the energy trading company Enron.) SBF told me, "The heads of the company are trying to burn it all to the ground out of shame."

SBF argues that he should have continued to work to raise more funds and insists that if he had done so, customers could start withdrawing funds within a month. The Wall Street Journal reported earlier this week that SBF was working to raise funds but found no signs of any investors committing to invest. The document also stated that even if new funding were obtained, negotiations would need to take place with foreign exchange creditors and approval from the bankruptcy court would be required.

While SBF said some of his colleagues—co-founder Gary Wang and engineering director Nishad Singh—felt "scared," especially Nishad Singh felt "ashamed and guilty," SBF seems to maintain a certain attitude toward the collapse—nothing in the world is ever black and white.

The FTX Hack

Shortly after FTX filed for bankruptcy, users monitoring blockchain transactions noticed that hundreds of millions of dollars were being transferred out of the company. I asked SBF what happened. He replied that FTX was hacked, and this was either done by former employees or caused by malware on former employees' computers, with hundreds of pieces of malware in operation.

SBF's Next Plans

SBF said his top priority now is to raise $8 billion to secure the interests of account holders. He told me this is essentially the most important thing for him for the rest of his life. However, despite saying that a month ago he was one of the greatest fundraisers in the world, as of now, the funds FTX has been able to raise are still negligible, with no signs that any investors will bite. Even if he can secure financing, it may require the consent of creditors and the bankruptcy court.

This morning, I emailed SBF to confirm that his Twitter account had not been hacked and that it was indeed him I was conversing with. His lawyer declined to comment.