Founder of SkyBridge Capital, Anthony Scaramucci, has lifted the veil on the final days of the FTX exchange, including details of what Sam Bankman-Fried (SBF) and his father, Joseph Fried, were telling him as to the state of the exchange’s Bahamas ‘war room’ as the exchange empire fell apart.

Scaramucci, who anticipated a $500,000 Bitcoin in June 2022, shared the story in a panel discussion at Consensus 2023, titled ‘FTX: What happened?’, saying he wanted to contextualise the fraudulent collapse of the second largest crypto exchange last November.

He said:

I’ve had some time to talk with CZ about the situation. I think ultimately some people are of the belief that CZ put Sam out of business. That is not the case, and so I just want to state that explicitly.

Scaramucci said he doesn’t believe Binance CEO Changpeng Zhao tried to bankrupt FTX, but that he was instead reacting to disclosures that were becoming public, and to statements that Sam was making in meetings with industry insiders.

Referring to a fundraising tour with SBF to Riyadh, Dubai and Abu Dhabi in October 2022, he said:

Weirdly, the trip that we took to the Middle East sort of catalysed all of this. Sam was saying some things in some meetings [..] in Dubai that were derogatory of CZ.

Scaramucci said that CZ wasn’t thrilled when he heard Sam’s comments. He was “very upfront on Twitter that there was obviously a problem,” and CZ decided to put his FTT tokens up for sale.

But if Sam was running the business appropriately, and he wasn’t participating in the nefarious ways that he was in the business, the business would have been fine. Some people have got on a stage like this and said ‘well, CZ put Sam out of business.’ No, Sam put Sam out of business, by the way he ran that business.

Scaramucci put into words what many have already stated on Twitter and elsewhere; that SBF’s fraudulent behaviour was the direct cause of his own downfall, and that of everyone affiliated with him.

On Nov. 7, Scaramucci was in Sarasota, Florida, when he heard “rumblings” that something was wrong at FTX. The exchange had bought a 30% stake in SkyBridge, so Scaramucci was more or less partnered with Sam. This meant Scaramucci had a vested interest in seeing FTX perform, besides having direct access to the highest levels of the company’s board.

Scaramucci continued:

I got back to New York and I spoke to Sam’s dad about the problem. It was intimated to me that it was an asset-liability mismatch, that they were meeting redemptions and there were assets available, but they weren’t necessarily liquid and they needed time to get the liquidity, and they were looking for some rescue finance.

When Scaramucci asked Joseph Bankman how much they needed, he was taken aback at the response. He said:

They were talking about a billion dollars, which seemed a lot of money, but certainly would be manageable in the context of the size of the business. But later in the evening, that number went from $1 billion to $4.5 billion.

Scaramucci said he realised that there was clearly a problem at the moment, “and it’s a bigger problem than they want to admit to.” He decided to book a flight to the Bahamas that same evening to see what was going on for himself. “I put my name and reputation at stake,” he said. “I introduced Sam to a lot of people. I organised a dinner for the likes of Tony Blair and Bill Clinton and a whole host of luminaries one short year ago.”

Scaramucci said that when he reached FTX’s Albany compound, he witnessed desperation and despair. “I would say that the war room was despondent,” he said.

It was clear to a few people that there was a very small group of people that had done some things that they didn’t let the other group of people into. Sam was there, he looked disassociated, he was apologizing to me for what happened, he was claiming that it was mislabelling. Remember, this is now Tuesday [Nov. 8], and there was some discussion in the early morning about CZ buying the business. But I think once CZ got to look at the business, that non-binding letter that they signed, he realized that it was not possible to really buy that business.

Only three days after this moment, FTX and all its subsidiaries filed for bankruptcy.

Perhaps hoping for an outcome that might bring the defunct exchange back online, Scaramucci added that when the full story is out, he expects it to be a small number of wrongdoers to be responsible.

“If you look at the Madoff situation, three or four people in a closed loop,” he said.

I think as this story unfolds, if it eventually gets to trial, you’ll see that it was three or four people in a closed loop that perpetrated the crime. And obviously, it’s in the paper and the Department of Justice has announced this, three of those four people have already pled guilty.

“It’ll be very interesting to see how Sam makes the decision on his own plea. He’s saying he’s innocent for now… we’ll have to see if it gets to trial.”

Under the exchange’s new CEO, John Ray, recovered $7.3 billion in cash and liquid reserves, an uptick of over $800 million by April 13. This is in large part due to the market-wide recovery in Q1 2023, which saw crypto asset valuations increase across the board. FTX is negotiating with stakeholders about its options for the future, and what a reboot might look like for the exchange. However, it remains to be seen whether FTX users will ever trust the tainted brand name again.

The next status conference for Bankman-Fried’s case is set for June 15. The criminal trial will begin on October 2, 2023.

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