Scaramucci’s shocking account of FTX collapse at Consensus leaves war room in despair

Introduction

SkyBridge Capital founder Anthony Scaramucci recently spoke out about the final days of FTX in a panel discussion at Consensus 2023. Scaramucci revealed what he believes led to the collapse of FTX and what he remembers from his perspective.

What Happened at FTX?

According to Scaramucci, most employees of the failed crypto exchange probably didn’t know what its executives were doing behind closed doors until it was too late. He remembers hearing that FTX CEO Sam Bankman-Fried had commented negatively about Binance CEO Changpeng “CZ” Zhao. Scaramucci claimed that CZ responded by selling his share of FTX Tokens. However, CZ’s stated reason for unloading FTX Tokens was “post-exit risk management.“ Scaramucci was emphatic in stating that CZ did not cause the bankruptcy of FTX.

Scaramucci said that on Nov. 6 or 7, he had just returned from giving a speech in Florida. After speaking to Bankman-Freid’s father, he learned that there was some kind of liquidity problem at FTX. He thought the exchange had the assets to repay depositors but that these assets could not be sold quickly, threatening to force the exchange to halt withdrawals.

Scaramucci wanted to help the exchange, he said. But “later in the evening, that number went from 1 billion to 4.5 billion,” referring to the dollar amount of the liquidity shortfall. This convinced him that something more serious was going on at the exchange. He immediately booked a flight to the Bahamas to visit FTX headquarters and discover what was happening.

Why Did FTX Collapse?

Scaramucci implied that FTX was a fraud and not merely the victim of liquidity crises brought on by market events, stating: “Three of those four people have already pled guilty. So, guys, when the windows open and you hear clippity clop outside, it’s a horse. It’s not a zebra. […] It’ll be very interesting to see how Sam makes a decision on his own plate.” FTX filed for bankruptcy in November. Two of its executives, Gary Wang and Nishad Singh, have pled guilty to fraud, along with Caroline Ellison, the former CEO of Alameda Research. Bankman-Fried has also been charged with fraud. However, he has pleaded not guilty and claims that some of the money lost can be recovered.

Conclusion

The collapse of FTX serves as a reminder of why frauds are almost always committed by a small group of people. Scaramucci believes that crimes like this are difficult to commit with a large group of people because there is usually someone with a conscience who will speak out. While FTX may have collapsed, it remains to be seen what the future holds for those involved in the scandal.