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Former President of FTX US breaks silence, says SBF was insecure, volatile and spiteful, 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 the behavior and character of former CEO Sam Bankman-Fried to date.

Harrison was in a somewhat unique position within the FTX organization: Whereas many ‘senior’ executives at the exchange were actually twenty-somethings in their first leadership positions, he was an established professional before Bankman-Fried recruited him, and claims to have actually trained Sam at Jane Street.

While virtually all those fledgling C-level executives were creatures of SBF’s insular compound in the Bahamas, Harrison was based in Berkeley, California.

And while they ran a massive consortium of companies as interconnected as they were unregulated, using QuickBooks for accounting and chat for expense reports, he was tasked with building an exchange that would meet the requirements of U.S. regulators.

But perhaps the biggest reason why Harrison is now the source of the first true insider account of FTX and SBF is the simplest: He left months before the whole structure imploded. And the reasons he quit foreshadow the other stories we’ve read in recent months, the ones contained in indictments of the legal type, 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 unfamiliar with my plans were surprised, and some questioned whether I’d been fired. It seemed as though I’d left a dream job abruptly after a very short tenure.”

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

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

“My first few months at FTX US were wonderful,” Harrison said. “I worked largely independently of Sam to grow 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 advocating strongly for establishing separation and independence for the executive, legal, and developer teams of FTX US, and Sam disagreed.”

He said that “pronounced cracks began to form“ in his relationship with Bankman-Fried, who was accustomed to issuing unilateral decrees to FTX US from the Bahamas.

“I saw in that early conflict his total insecurity and intransigence when his decisions were questioned, his spitefulness, and the volatility of his temperament,” Harrison said. “I realized he wasn’t who I remembered.”

Harrison suspected addiction or mental health problems might have been partially to blame. “But I didn’t know Sam well enough personally or have any real time to reflect on the question,” 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 non-starter at FTX, especially when “his influence over the media, FTX’s partners, the venture capital industry, and the traditional finance industry was pervasive and unyielding.”

In the months that followed, Harrison said, “I further argued for enacting a sensible hiring policy, for staffing FTX US with a C-suite of experienced officers, for transparent communication between Sam and FTX US leadership, for Gary Wang’s and Nishad Singh’s software development responsibilities to be formally identified and shared across a larger group, for the delegation of managerial responsibility and controls beyond Sam and Bahamas-based executives, and other important matters.”

He said Sam’s reactions to his requests were completely unpredictable, and highly unprofessional. “He responded at times with dysregulated hostility, at times with gaslighting and manipulation, but ultimately chose to isolate me from communication on key decision-making.”

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

In early April 2022, after 11 months at the company, Harrison claims he made a final attempt to address the issues. “I made a written formal complaint about what I saw to be the largest organizational problems inhibiting FTX’s future success,” he said. “I wrote that I would resign if the problems weren’t addressed.”

The response from above was 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 instructed to formally retract what I’d written and to deliver an apology to Sam that had been drafted for me.”

Harrison wrote that this response left no doubt in his mind that he needed to leave, but a senior executive quitting abruptly “would be harmful to the company and my FTX US reports,” so he wound down his most pressing projects and left quietly, shifting his focus to a new startup.

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

“The information that is now in the public record – from indictments, complaints, guilty pleas, or otherwise – show facts that even now, after months, are difficult for me to assimilate into reality,” he said.

Harrison thought the management and organizational issues he saw were those of a good-faith startup experiencing growing pains. “I never could have guessed that underlying these kinds of issues — which I’d seen at other more mature firms in my career and believed not to be fatal to business success — was multi-billion-dollar fraud.”

Harrison said it’s now clear to him why things like independence and transparency with the seasoned professionals at FTX US, which seemed obvious and essential for good business, were anathema to Sam and his inner circle. “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 one of us had suspected let alone learned the truth, we would have reported them immediately.”

Harrison wrote that since leaving FTX for his own company, the sticking point in his meetings with investors switched from deference to and fear of Sam - “Is FTX investing? 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 weren’t involved in what Sam and others did, but we can’t take on the PR risk of associating ourselves with FTX, no matter how capable you are or compelling your idea is.”

He said he continues to weather “frenzied and baseless accusations” on social media, including “that my resignation could only mean I had knowledge of a criminal scheme […] Or that I’m seeking a plea deal even though I haven’t been accused of wrongdoing and am not a target in any investigation. Or that while at FTX US I colluded with Citadel to manipulate tokenized 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 scheduled to begin in early October 2023.

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