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When Larry Fink Interviewed Sam Bankman-Fried
Two months before the former FTX CEO was arrested, the two men shared a stage at Robin Hood, talking management philosophy, crypto lingo, the future of Bitcoin — and French fries.
Two months before Sam Bankman-Fried was indicted on multiple counts of fraud, the founder of crypto exchange FTX was just another billionaire CEO sitting on the stage at the Robin Hood Investors Conference in New York City. The 30-year-old crypto kingpin was such a draw that BlackRock CEO Larry Fink, a titan of finance, was chosen to interview him at the annual event, where thousands of hedge fund managers and other financiers pay up to hear stock picks and macroeconomic views — all behind closed doors.
In a session billed as a “digital fireside chat,” the two CEOs agreed that the markets were in turmoil, people were fearful (a likely boost to Bitcoin, according to Fink), and that productivity was being zapped by the work-from-home movement. And they both eschewed the term “crypto,” preferring something like “decentralized distributed digital ledger technology.”
Said Bankman-Fried: “Honestly, sometimes if you attach a lot of vague adjectives to something, it’s way harder to attack because what even is it? It’s not a catchy sound bite anymore. The crusade against decentralized distributed digital ledger technology, it’s not, I don’t know…”
“DDD,” quipped Fink in response.
Bankman-Fried, whose parents recently asked for him to be served vegan meals while incarcerated at the notorious Fox Hill Prison in the Bahamas, even joked about his diet while on stage. “I went on the French fry diet for a while,” he said. When Fink asked if it worked, Bankman-Fried replied, “I ate a lot of French fries, so in that sense it worked. It was good.”
Institutional Investor recently received an audio of the off-the-record conversation from an individual who attended the conference. The annual event’s proceeds go to the Robin Hood Foundation, a charitable organization that serves New York City’s poor.
Listening to the interview now, in light of what has transpired, is an eerie reminder of the high esteem in which Bankman-Fried was held in the corridors of power until FTX collapsed in bankruptcy and he was engulfed in scandal. Last week, Bankman-Fried was charged with fraud by both the Department of Justice and the Securities and Exchange Commission. The DOJ has also accused him of money laundering and violating campaign finance laws. He is currently awaiting extradition to the U.S.
“Old-fashioned embezzlement” is what the new FTX CEO, John J. Ray III, called Bankman-Fried’s management style in last week’s House Financial Services Committee hearing on the collapse of the crypto exchange firm.
“I fucked up” is how Bankman-Fried started the dozens of interviews he gave before being arrested December 12. His main defense has been that he was simply not paying attention to risk management and was unaware that Alameda Research, FTX’s sister hedge fund, was using FTX customer deposits to trade and pay its debts.
But that’s not what he was saying on the stage at Robin Hood, when he talked up risk management and said that FTX managers — presumably including himself —were fully immersed in the business.
“You have a startup, a very successful one,” Fink said to Bankman-Fried. Fink — who has since revealed that BlackRock lost $24 million investing in FTX — asked Bankman-Fried at the conference how the CEO was going about building a “resilient” culture.
“One part of this is coming up with the vision,” responded Bankman-Fried, who said FTX actually has “two visions.” One is a platform for larger traders “that lets people trade the way they want to trade in a powerful way with the right risk model.” On the consumer side, he said, FTX built an app “that lets people do what they want to do with their money.” (Bankman-Fried is accused of stealing that money for his own purposes.)
But what really distinguished FTX, he said, was how the team is managed. “Everyone at the company should be at least 50 percent heads down working on actual things and, at most, 50 percent managing people,” he said. “You just cannot be a good manager if you don’t know what’s actually going on.”
In an extended back and forth banter with Fink on how working from home makes employees less productive, Bankman-Fried said 80 percent of FTX’s employees were working in the office “six and a half days a week.” Fink’s response: “I like that.”
Towards the end of the 30-minute conversation, Fink asked Bankman-Fried to predict the future. “I’m sure people would like to hear. Do you have a view on Bitcoin that you haven’t touched on?” asked Fink.
He did. First off, Bankman-Fried thought the introduction of regulation that was favorable to the industry was key to a turnaround — and that it could happen soon. “I think regulation is probably the most likely pillar to fall first,” he said. Since then, however, the news that FTX and its executives were donating heavily to politicians in Washington — and lobbying Congress to enact their preferred legislation — has made regulation favorable to the crypto industry unlikely to pass anytime soon.
The disgraced crypto kingpin also said at Robin Hood that if the stock markets were flat over the next six months, he would be “cautiously optimistic” about Bitcoin. “First of all, it’s just really been heavily sold over the last six months and all the leverage is out of the system now, so there’s not a lot more leverage to collapse.”
Since the day of the interview, Bitcoin has fallen another 15 percent and is down close to 60 percent over the past year.