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Wednesday, March 22, 2023

Elon Musk: Sam Bankman-Fried ‘triggered my BS detector’ when he approached about the investment on Twitter

After the epic collapse of the entire Sam Bankman-Fried crypto empire this week, even Elon Musk took a moment from his extremely chaotic week in front of Twitter to declare that he never trusted SBF, who stepped down as CEO of FTX on Friday when the company filed for Chapter 11 bankruptcy.

Bankman-Fried contacted Musk in March through his brokers (in SBF’s case it was William MacAskill of the philanthropic arm of the FTX Future Fund, which closed on Friday) to express interest in investing in Musk’s Twitter offering. That news broke in September when Musk’s text messages were leaked through legal process.

Musk’s banker in the Twitter deal, Michael Grimes of Morgan Stanley, told Musk at the time that SBF was offering “at least $3 billion” to help Musk buy Twitter, and he wanted to talk about the potential of “Social Media Blockchain Integration”.

Musk asked Grimes, “Does Sam really have $3 billion in liquid?”

On Friday night, as Crypto Twitter continued to have a field day recirculating the recent story involving SBF, a popular account that shares internal tech industry emails tweeted the exchange again. Musk replied, “Exactly. It turned on my bs detector, so I didn’t think I had $3 billion.”

Grimes had spoken about the Bankman-Fried offer to Musk, texting him: “He’s interested in you…I think you’ll like him. Ultragenius and maker-builder as your formula. Built FTX from scratch after the Physics from MIT.

Bankman-Fried was interested in helping design a blockchain version of Twitter. Musk, despite being a defender of cryptocurrencies, rejected that proposal, telling Grimes matter-of-factly: “Blockchain Twitter is not possible.” He added that he would only meet with SBF “as long as he doesn’t have to have a laborious discussion about blockchain.”

Grimes told Musk that even without the blockchain component, Bankman-Fried wanted to invest. Musk passed.

Of course, in light of the behind-the-scenes financial embezzlement at FTX, which was using client funds and its own FTT token to prop up SBF’s hedge fund Alameda, everyone is eager to distance themselves from the stench.

On October 27, Musk took control of Twitter.

The next two weeks, FTX went up in flames after Changpeng “CZ” Zhao, CEO of rival exchange Binance, announced that his company would liquidate its holdings of FTX’s FTT token. That brought down the price of FTT and caused $5 billion in withdrawals from FTX clients, which it did not have the liquidity to cover.

Musk, even through the public mess of the fake Twitter account crisis this week, certainly had a better week than Bankman-Fried.

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