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Sam Bankman-Fried called his Stanford Law professor parents when FTX was collapsing: 'Hey guys, there might be a problem'

Sam Bankman-Fried
Sam Bankman-Fried speaks with Andrew Ross Sorkin during The New York Times DealBook Summit in New York City on November 30, 2022.

Michael M. Santiago/Getty Images

  • Sam Bankman-Fried's crypto empire FTX collapsed and filed for bankruptcy this month.

  • The founder let his parents know about his company's impending downfall, he told DealBook Summit.

  • He continues to receive support from his parents who are longtime Stanford Law professors.

Amid the collapse of the crypto exchange platform FTX in early November, Sam Bankman-Fried made a call to his parents, who are both Stanford Law School professors, to let them know about his company's impending downfall.

"Hey guys there might be a problem," Bankman-Fried recalled during a live virtual interview on Wednesday at The New York Times' DealBook Summit.

After the crypto exchange Binance pulled out of a deal to acquire Bankman-Freid's company on November 9, FTX's implosion has sent ripples across the entire crypto industry.

A Chapter 11 bankruptcy filing by FTX also revealed a wide range of missteps and a "complete failure of corporate controls," according to the company's newly appointed CEO, John J. Ray III.

Partly instrumental in FTX's collapse was Alameda Research, a trading house that Bankman-Fried also founded in 2017. Alameda heavily relied on FTX and a token created by the crypto exchange, called FTT, in order to continue bringing in more and more investors to trade with the firm.

According to The New York Times, Alameda began to struggle to pay its lenders as crypto prices, including the value of FTT, fell earlier this year. Reports later revealed that FTX quietly lent billions of dollars of customer funds to Alameda when the firm was hit with a series of losses in May and June. Alameda would file for bankruptcy along with FTX.

"Looks like Alameda's position might be imploding here and there might be liquidity issues," Bankman-Fried recalled telling his parents during his DealBook Summit interview, adding that the moment was "a little bit of a blur."

The FTX founder expressed remorse during the interview for the residual blowback his family faced after his company's fall.

"The largest number of people who were hurt were customers, and I felt incredibly bad about that," he said. "But anyone who was close to me, including my parents, including employees, co-workers, who fought with the company to push forward, were hurt by this and bore no responsibility for that."

Bankman-Fired said that his parents continue to support him.

His mother, Barbara Fried, has been a Stanford Law professor since 1987, specializing in tax policy, property theory, and political theory, according to her university profile page. 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.

Read the original article on Business Insider