Binance exec says ‘it was like a bomb went off’ at FTX, compares Bankman-Fried to Madoff and Elizabeth Holmes
Binance’s chief strategy officer said it took his company two hours of due diligence on FTX to determine that Sam Bankman-Fried’s crypto exchange was beyond saving.
“It was like a bomb went off in that place,” Patrick Hillmann, Binance CSO, told CNBC on Thursday. “You know, we’re getting on calls, people are crying. … It was complete pandemonium over there,” Hillmann said, adding that when “Sam went completely silent on them, the entire organization just fell to pieces.”
FTX’s spectacular collapse last week was first made apparent when Binance, the world’s largest exchange for cryptocurrencies, said on Nov. 8 that it signed a nonbinding agreement to acquire its smaller rival for an undisclosed sum. FTX was in the midst of a liquidity crunch, with customers demanding billions of dollars in withdrawals a day. It was money that FTX didn’t have, because it was using client deposits for other purposes.
Binance technically had 30 days to explore a deal, but the next day it backed out of the rescue plan, saying in a statement that FTX’s “issues are beyond our control or ability to help.” As one of FTX’s first investors, Binance knew the company well.
“Somehow they were always spending more and more and more and more money,” Hillmann said. “We never understood where the money was coming from. It just never made any sense to us.”
FTX’s lavish expenses included a $135 million deal for the naming rights to the arena of the NBA’s Miami Heat, a Super Bowl ad featuring comedian Larry David and sponsorship of Formula One.
“For us, if there’s smoke there’s probably fire,” Hillmann said. “I don’t think we ever even could have come close to realizing exactly how hot the fire was burning inside.”
Hillmann said lawmakers and venture capitalists were apparently drawn in by Bankman-Fried’s persona and appearance of credibility. He said the FTX founder was either like Theranos’ Elizabeth Holmes, who Hillmann said was “completely delusional,” or Bernie Madoff, who was “manipulative” and created a “cult of personality.”
“There’s no middle ground,” Hillmann said. “It’s one of the two.”
CNBC reached out to FTX, which had no response to Binance’s accusations. Bankman-Fried, who resigned from the company and was replaced as CEO by restructuring expert John Ray III, says he’s still trying to reach a financing deal in a way that can help depositors.
Ray, who was in charge of restructuring Enron, slammed FTX Thursday morning in a filing with the U.S. Bankruptcy Court for the District of Delaware, saying in his 40 years in the business he’s never seen “such a complete failure of corporate controls.” FTX said Bankman-Fried no longer speaks for the company.
Hillmann said that early on there were some concerns with FTX and its unsavory relationship with Alameda Research, Bankman-Fried’s hedge fund. However, the company had raised money at a $32 billion valuation from prominent investors, and Bankman-Fried made multiple trips to Washington, D.C., to testify in front of lawmakers. He was also a major contributor to Democratic political campaigns, while another executive, Ryan Salame, was a big Republican donor.
“We would just assume that because the scale and level of engagement they have with some of the most powerful people on this planet, that those checks and balances just naturally have to be there for those individuals to agree to be a part of their work,” Hillmann said.
WATCH: Binance decided FTX was beyond saving after two-hour review of balance sheet
Technology
As nations build ‘sovereign AI,’ open-source models and cloud computing can help, experts say
Digital illustration of a glowing world map with “AI” text across multiple continents, representing the global presence and integration of artificial intelligence.
Fotograzia | Moment | Getty Images
As artificial intelligence becomes more democratized, it is important for emerging economies to build their own “sovereign AI,” panelists told CNBC’s East Tech West conference in Bangkok, Thailand, on Friday.
In general, sovereign AI refers to a nation’s ability to control its own AI technologies, data and related infrastructure, ensuring strategic autonomy while meeting its unique priorities and security needs.
However, this sovereignty has been lacking, according to panelist Kasima Tharnpipitchai, head of AI strategy at SCB 10X, the technology investment arm of Thailand-based SCBX Group. He noted that many of the world’s most prominent large language models, operated by companies such as Anthropic and OpenAI, are based on the English language.
“The way you think, the way you interact with the world, the way you are when you speak another language can be very different,” Tharnpipitchai said.
It is, therefore, important for countries to take ownership of their AI systems, developing technology for specific languages, cultures, and countries, rather than just translating over English-based models.
Panelists agreed that the digitally savvy ASEAN region, with a total population of nearly 700 million people, is particularly well positioned to build its sovereign AI. People under the age of 35 make up around 61% of the population, and about 125,000 new users gain access to the internet daily.
Given this context, Jeff Johnson, managing director of ASEAN at Amazon Web Services, said, “I think it’s really important, and we’re really focused on how we can really democratize access to cloud and AI.”
Open-source models
According to panelists, one key way that countries can build up their sovereign AI environments is through the use of open-source AI models.
“There is plenty of amazing talent here in Southeast Asia and in Thailand, especially. To have that captured in a way that isn’t publicly accessible or ecosystem developing would feel like a shame,” said SCB 10X’s Tharnpipitchai.
Doing open-source is a way to create a “collective energy” to help Thailand better compete in AI and push sovereignty in a way that is beneficial for the entire country, he added.
Open-source generally refers to software in which the source code is made freely available, allowing anyone to view, modify and redistribute it. LLM players, such as China’s DeepSeek and Meta’s Llama, advertise their models as open-source, albeit with some restrictions.
The emergence of more open-source models offers companies and governments more options compared to relying on a few closed models, according to Cecily Ng, vice president and general manager of ASEAN & Greater China at software vendor Databricks.
AI experts have previously told CNBC that open-source AI has helped China boost AI adoption, better develop its AI ecosystem and compete with the U.S.
Access to computing
Prem Pavan, vice president and general manager of Southeast Asia and Korea at Red Hat, said that the localization of AI had been focused on language until recently. Having sovereign access to AI models powered by local hardware and computing is more important today, he added.
Panelists said that for emerging countries like Thailand, AI localization can be offered by cloud computing companies with domestic operations. These include global hyperscalers such as AWS, Microsoft Azure and Tencent Cloud, and sovereign players like AIS Cloud and True IDC.
“We’re here in Thailand and across Southeast Asia to support all industries, all businesses of all shapes and sizes, from the smallest startup to the largest enterprise,” said AWS’s Johnson.
He added that the economic model of the company’s cloud services makes it easy to “pay for what you use,” thus lowering the barriers to entry and making it very easy to build models and applications.
In April, the U.N. Trade and Development Agency said in a report that AI was projected to reach $4.8 trillion in market value by 2033. However, it warned that the technology’s benefits remain highly concentrated, with nations at risk of lagging behind.
Among UNCTAD’s recommendations to the international community for driving inclusive growth was shared AI infrastructure, the use of open-source AI models and initiatives to share AI knowledge and resources.
Technology
Amazon CEO Jassy says AI will lead to ‘fewer people doing some of the jobs’ that get automated
Amazon CEO Andy Jassy said the rapid rollout of generative artificial intelligence means the company will one day require fewer employees to do some of the work that computers can handle.
“Like with every technical transformation, there will be fewer people doing some of the jobs that the technology actually starts to automate,” Jassy told CNBC’s Jim Cramer in an interview on Monday. “But there’s going to be other jobs.”
Even as AI eliminates the need for some roles, Amazon will continue to hire more employees in AI, robotics and elsewhere, Jassy said.
Earlier this month, Jassy admitted that he expects the company’s workforce to decline in the next few years as Amazon embraces generative AI and AI-powered software agents. He told staffers in a memo that it will be “hard to know exactly where this nets out over time” but that the corporate workforce will shrink as Amazon wrings more efficiencies out of the technology.
It’s a message that’s making its way across the tech sector. Salesforce CEO Marc Benioff last week claimed AI is doing 30% to 50% of the work at his software vendor. Other companies such as Shopify and Microsoft have urged employees to adopt the technology in their daily work. The CEO of Klarna said in May that the online lender has managed to shrink its headcount by about 40%, in part due to investments in AI and natural attrition in its workforce.
Jassy said on Monday that AI will free employees from “rote work” and “make all our jobs more interesting,” while enabling staffers to invent better services more quickly than before.
Amazon and other tech companies have also been shrinking their workforces through rolling layoffs over the past several years. Amazon has cut more than 27,000 jobs since the start of 2022, and it’s announced smaller, more targeted layoffs in its retail and devices units in recent months.
Amazon shares are flat so far this year, underperforming the Nasdaq, which has gained 5.5%. The stock is about 10% below its record reached in February, while fellow megacaps Meta, Microsoft and Nvidia are all trading at or very near record highs.
WATCH: Jassy says robots that will eventually do delivery and transportation
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