A Sam Bankman-Fried trip to the Middle East intended to raise capital for FTX hastened the collapse of the cryptocurrency exchange, according to Anthony Scaramucci.
Scaramucci told Business Insider he believes the October Mideast jaunt he took with Bankman-Fried led to the “immediate downfall” of FTX, because the co-founder spent much of their trip in Saudi Arabia criticizing rival crypto exchange Binance and its founder CEO Changpeng “CZ” Zhao.
That prompted Zhao to sell a large portion of his holdings in FTT, the cryptocurrency issued by FTX, said Scaramucci, the former White House communications director under Donald Trump and current SkyBridge Capital CEO.
“So in some ways, I’m happy that we took that trip because we could still be living in a world of FTX,” Scaramucci said. “He could have continued to cover it up, and I could have erroneously helped him do that by helping them raise money and building other corporate relationships.”
Even before the trip started, there was an air of concern for Scaramucci.
Worried that Bankman-Fried’s famously sloppy sartorial style would spook potential investors, Scaramucci bought the then-CEO of FTX a suit from Bloomingdale’s to wear on the trip, the SkyBridge Capital founder said.
Scaramucci, who sold 30% of his business to FTX in September and is trying to get it back amid the FTX bankruptcy, said before the collapse, he wanted Bankman-Fried to be presentable when they met with potential investors in Saudia Arabia, Abu Dhabi and Dubai in the United Arab Emirates.
The disgraced CEO had famously worn a T-shirt and baggy shorts in many other key appearances.
“I didn’t certainly like elements of the way he was dressed,” Scaramucci said. “I bought him a suit, frankly, to take him to the Middle East with me and told him he can’t dress with a T-shirt in the Middle East.”
“When you’re in Rome, do as the Romans do.”
While speaking on a panel at the World Economic Forum in Davos last week, Scaramucci said he viewed Bankman-Fried as “the Mark Zuckerberg of crypto — I did not think he was the Bernie Madoff of crypto.”
The Mooch, who is launching a new podcast, called “Open Book,” said he has 20-20 hindsight now.
“Somebody was like: ‘Well, look at the way he was dressed and the way he handled himself, didn’t you think he was a bozo?’ And I’m like, OK, the hindsight test? Yes, of course, he’s a bozo,” Scaramucci said.
Bankman-Fried has denied stealing customer money and pleaded not guilty to eight criminal charges related to the collapse of the company.
An FTX lawyer recently said that Bankman-Fried’s hedge fund, Alameda, had access to a $65 million line of credit from FTX, Insider noted, and that staff had created a “back door” that let the hedge fund draw from customer funds on the crypto exchange, Insider reported.
Bankman-Fried stepped down from the company and filed for Chapter 11 bankruptcy in December, after it was revealed that Alameda held large stores of FTT. He has denied that he stole any customer funds.
“I didn’t realize, unfortunately, that he had an accounting back door,” Scaramucci told Insider. ” And the numbers that he was showing me and other venture capitalists and potential capital allocators were inaccurate.”
“I had a relationship with Sam — I liked and I trusted him,” he added. “And so when somebody betrays your trust like that, it’s upsetting. Hopefully, he’ll serve some time in jail for what he did, and the industry can move on and grow and hopefully heal from it.”