Former FTX US President Breaks Silence, Says SBF Was Insecure, Unstable and Malicious, Threatened to 'Destroy My Professional Reputation'

Former FTX US President Breaks Silence, Says SBF Was Insecure, Unstable and Malicious, Threatened to ‘Destroy My Professional Reputation’

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(Kitco News) –
Brett Harrison, the former president of FTX US, chose to break his silence on Saturday, and the story he shared is the most personal and damning indictment of former CEO Sam Bankman-Fried’s demeanor and character to this day.

Harrison held a somewhat unique position within the FTX organization: while many senior exchange executives were actually in their early twenties in their first leadership positions, he was an established professional before Bankman-Fried only recruits him and claims to have actually trained Sam in Jane Street.

While virtually all of these young C-level executives were creatures of SBF’s island complex in the Bahamas, Harrison was based in Berkeley, Calif.

And as they ran a huge consortium of interconnected and unregulated businesses, using QuickBooks for accounting and chat for expense reports, he was tasked with creating an exchange that would meet the demands of US regulators.

But perhaps the main reason Harrison is now the source of FTX and SBF’s first real insider account is the simplest: He left months before the whole structure imploded. And his reasons for resigning foreshadow other stories we’ve read in recent months, those contained in court-style indictments, in sworn testimony and soon in court hearings.

“I worked at FTX US for seventeen months,” Harrison said. “When my resignation was made public, those unaware of my plans were surprised and some wondered if I had been fired. It was as if I had abruptly left a dream job after a very short tenure.

But Harrison said the dream job turned out to be anything but, and turned into “months of disputes over management practices at FTX.”

He said Sam asked him to join FTX US “casually via text at the end of March 2021” after they had barely kept in touch since their Jane Street days. “He seemed like a sensitive, intellectually curious person who cared about animals, and that endeared me to him.”

“My first few months at FTX US were wonderful,” Harrison said. “I worked largely independently of Sam to develop a US-based team and foster a professional environment prepared for regulated businesses. The team was dedicated and productive. Customer feedback was positive. I was excited about the future.

However, Harrison said that after six months at FTX, “I began to advocate strongly for establishing the separation and independence of the executive, legal, and development teams at FTX US, and Sam disagreed. .”

He said “pronounced cracks began to form” in his relationship with Bankman-Fried, who used to issue unilateral executive orders to FTX US from the Bahamas.

“I saw in that first conflict his utter insecurity and his intransigence when his decisions were questioned, his viciousness and the volatility of his temper,” Harrison said. “I realized he wasn’t the one I remembered.”

Harrison suspected substance abuse or mental health issues were partly to blame. “But I didn’t know Sam well enough personally or didn’t really have time to think about it,” he said. “I was in a business relationship with him and he was making a number of decisions about running a business that I disagreed with.”

He quickly discovered that disagreeing with Sam was a no-start at FTX, especially when “his influence on the media, FTX partners, the venture capital industry, and the traditional financial industry was pervasive and inflexible”.

In the months that followed, Harrison said, “I further advocated for the enactment of a sensible hiring policy, for staffing FTX US with a C-suite of experienced officers, for transparent communication between Sam and the management of FTX US, for the software of Gary Wang and Nishad Singh. development responsibilities need to be formally identified and shared within a larger group, for delegation of responsibility and management controls beyond executives based in Sam and the Bahamas, and other important issues.

He said Sam’s reactions to his requests were completely unpredictable and very unprofessional. “He responded sometimes with unregulated hostility, sometimes with gaslighting and manipulation, but ultimately chose to isolate me from communicating about key decision-making.”

After that, Harrison said he would find out about decisions affecting FTX US that were made without his input and behind his back. “It was terrible,” he said, calling his condition at the time “desperate but trying hard not to show it.”

In early April 2022, after 11 months with the company, Harrison claims to have made one last attempt to resolve the issues. “I filed a formal written complaint about what I considered to be the biggest organizational issues that impede FTX’s future success,” he said. “I wrote that I would resign if the issues were not resolved.”

The response from above has been denial and devastation. “I was threatened on Sam’s behalf that I would be fired and that Sam would destroy my professional reputation. I was asked to officially retract what I had written and to issue an apology to Sam that was written for me.

Harrison wrote that this response left no doubt in his mind that he should leave, but that a senior executive resigning abruptly “would be detrimental to the company and my FTX US reporting,” so he ended his plans. the most pressing ones and quietly left, changing its focus to a new startup.

When FTX and Alameda imploded in November, dragging more than 100 subsidiaries into bankruptcy with them, including FTX US, he was stunned.

“The information that is now on the public record – indictments, complaints, guilty pleas or otherwise – shows facts that even now, after months, are difficult for me to equate with reality,” did he declare.

Harrison thought the management and organizational issues he saw were those of a bona fide startup struggling to grow. “I could never have guessed that these sorts of underlying issues – which I had seen in other more mature companies over the course of my career and which I thought were not fatal to the success of the company – were a multi-billion dollar fraud.”

Harrison said it was now clear to him why things like independence and transparency with seasoned professionals at FTX US, which seemed obvious and essential to good business, were anathema to Sam and those around him. “We have extensive professional networks, our own lines of communication with US regulators, and our own authority to speak to US media,” he said. “If any of us had suspected let alone learned the truth, we would have immediately reported it.”

Harrison wrote that since leaving FTX for his own business, the sticking point of his meetings with investors has shifted from deference to fear of Sam – “Does FTX invest? Is Sam okay with you doing this? Do you mind if we confirm with him?” – to a kind of guilt by association: “We know you’re not involved in what Sam and others did, but we can’t take the risk of partnering with FTX, no matter how capable you are or how compelling your idea is. »

He said he continued to face “frantic and baseless accusations” on social media, including “that my resignation could only mean that I had knowledge of a criminal scheme”. […] Or that I’m seeking a plea deal even though I haven’t been charged with wrongdoing and I’m not the target of any investigation. Or that while I was at FTX US I colluded with Citadel to manipulate token stock prices.

Harrison concluded by thanking those who chose to support him “through the most devastating and destabilizing event of my professional life.”

The criminal trial of former FTX CEO Sam Bankman-Fried is set to begin in early October 2023.

Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. This is not a solicitation to trade commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for loss and/or damage resulting from the use of this publication.

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