- Sam Bankman-Fried’s crypto empire FTX collapsed and filed for bankruptcy this month.
- The founder informed his parents of his company’s impending demise, he told DealBook Summit.
- He continues to receive support from his parents, who are longtime law professors at Stanford University.
Amid the collapse of crypto exchange FTX in early November, Sam Bankman-Fried called his parents, who are both Stanford Law School professors, to inform them of his company’s imminent demise.
“Hey guys, there might be a problem,” Bankman-Fried recalled during a live virtual interview Wednesday at the New York Times’ DealBook Summit.
After crypto exchange Binance pulled out of a deal to acquire Bankman-Freid’s company on Nov. 9, the implosion of FTX sent ripples across the crypto industry.
A Chapter 11 bankruptcy filing by FTX also revealed a multitude of missteps and a “complete failure of corporate controls,” according to the company’s newly appointed CEO, John J. Ray III.
Partially instrumental in the collapse of FTX was Alameda Research, a trading house that Bankman-Fried also founded in 2017. Alameda relied heavily on FTX and a token created by the crypto exchange called FTT to continue attracting more and more investors to trade with the firm.
According to The New York Times, Alameda began struggling to pay its lenders as crypto prices, including the value of the FTT, fell earlier this year. Reports later revealed that FTX Alameda had been quietly lending billions of dollars in client funds when the company was hit by a series of losses in May and June. Alameda would file for bankruptcy along with FTX.
“Looks like Alameda’s position here is going to implode and there could be liquidity issues,” Bankman-Fried recalled telling his parents during his DealBook Summit interview, adding that the moment was “a bit blurry.” .
The FTX founder expressed regret during the interview for the residual setback his family faced after his company fell.
“Most of the people who got hurt were customers, and I felt incredibly bad about it,” he said. “But everyone close to me, including my parents, including employees, colleagues who have struggled with the company to move forward were hurt by it and didn’t take responsibility for it.”
Bankman-Fired said his parents continue to support him.
His mother, Barbara Fried, has been a Stanford law professor since 1987 and, according to her university profile page, specializes in tax policy, property theory, and political theory. His father, Joseph Bankman, joined the faculty in 1988 and also has a focus on tax policy.
They did not respond to a request for comment.