Elon Musk Says FTX Founder Turned Off His BS Meter When He Offered To Back His Twitter Purchase

Elon Musk has revealed he turned down crypto mogul Sam Bankman-Fried’s offer to help fund his Twitter takeover last spring, saying the now-disgraced FTX founder set his “bulls**t meter” on.

“To be honest, I had never heard of him,” Musk said of the embattled crypto mogul, while speaking in a Twitter Space audio chat room early Saturday, according to CoinDesk.

“But then I got loads of people telling me [that] he has, you know, huge sums of money that he wants to invest in the Twitter business, recalled Musk, who secured billions in outside funding to back his $44 billion Twitter purchase.

And I talked to him for about half an hour. And I know my bulls**t meter was redlining. It was like this dude is bulls—that was my impression,” he added.

Bankman-Fried stepped down as CEO of FTX on Friday, as the crypto exchange filed for bankruptcy and reports emerged that up to $2 billion in client funds had disappeared from the company’s books.

Musk added: “Then I was like, man, everybody including big investment banks — everybody’s talking about him like he’s walking on water and has a million dollars.”

‘And that [was] not my impression … that the dude is just – there’s something wrong, and he doesn’t have capital, and he won’t come through. That was my prediction,” Musk added.

Tweeting late into the night, Musk also shared a crude meme depicting Bankman-Fried as the star of a pornographic film titled “Man F***s 5 Million People At Once.”

Musk’s text messages, previously disclosed in court filings, back up his memory.

They show that on April 25, when Musk first revealed his deal to buy Twitter, his personal banker Michael Grimes shared Bankman-Fried’s offer to finance the venture.

Musk appears skeptical in the text messages, dismissing Bankman-Fried’s plans to use blockchain technology for Twitter and questioning whether he had the money to back his funding offer.

Meanwhile, collapsed crypto exchange FTX said on Saturday it had seen “unauthorized transactions”, with analysts saying millions of dollars worth of assets had been withdrawn from the platform.

Blockchain analytics firm Elliptic said about $473 million worth of crypto assets were “moved out of FTX wallets under suspicious circumstances early this morning,” but could not confirm that the tokens had been stolen.

FTX US general counsel Ryne Miller said in a tweet shortly after 0700 GMT on Saturday that the company had “accelerated” the process of moving all digital assets into cold storage “to mitigate damage from observing unauthorized transactions.”

Cold storage refers to crypto wallets that are not connected to the internet to protect themselves from hackers.

Earlier Saturday, Miller said in a tweet that he was “investigating wallet movement abnormalities related to consolidation of FTX balances across exchanges.”

In a separate development, about $2 billion of client funds have disappeared from collapsed crypto exchange FTX, according to two people familiar with the matter.

Founder and CEO Sam Bankman-Fried secretly transferred $10 billion in client funds from FTX to the trading firm Alameda Research, which is run by his girlfriend Caroline Ellison, Reuters reports.

Much of that sum has since disappeared, they said. One source put the missing amount at about $1.7 billion. The other said the difference was between $1 billion and $2 billion.

While it is known that FTX moved client funds to Alameda, the missing funds are reported here for the first time.

The financial hole was revealed in records Bankman-Fried shared with other senior executives on Sunday, according to the two sources.

The documents provided an updated account of the situation at the time, they said. Both sources held senior FTX positions until this week and said they were briefed on the company’s finances by top staff.

Bahamas-based FTX filed for bankruptcy on Friday after a rush of customer withdrawals earlier this week. A bailout deal with rival exchange Binance went through, sparking crypto’s highest-profile collapse in recent years.

In text messages to Reuters, Bankman-Fried said he “did not agree with the characterization” of the $10 billion transfer.

“We didn’t transfer in secret,” he said. “We had confusing internal markings and misread it,” he added, without elaborating.

Asked about the missing funds, Bankman-Fried replied: ‘???’

FTX and Alameda did not respond to requests for comment.

In a tweet on Friday, Bankman-Fried said he was “pieceing together” what had happened at FTX.

“I was shocked to see things unravel the way they did earlier this week,” he wrote. “I will write a more complete play-by-play post soon.”

At the heart of FTX’s problems were losses at Alameda that most FTX executives were unaware of, Reuters previously reported.

Client withdrawals had increased on Sunday after Changpeng Zhao, CEO of the giant crypto exchange Binance, said that Binance would sell its entire stake in FTX’s digital token, worth at least $580 million, “due to the latest revelations.”

Four days before, news agency CoinDesk reported that much of Alameda’s $14.6 billion in assets was held in tokens.

That Sunday, Bankman-Fried held a meeting with several executives in the Bahamian capital of Nassau to calculate how much external financing he needed to cover FTX’s deficit, the two people with knowledge of FTX’s finances said.

Bankman-Fried confirmed to Reuters that the meeting took place.

Bankman-Fried showed several spreadsheets to the heads of the firm’s regulatory and legal teams that revealed FTX had moved around $10 billion in client funds from FTX to Alameda, the two people said.

The spreadsheet showed how much money FTX loaned to Alameda and what it was used for, they said.

The documents showed that between $1 billion and $2 billion of those funds were not among Alameda’s assets, the sources said.

The spreadsheet did not indicate where that money was moved, and the sources said they do not know what became of it.

In a subsequent review, FTX’s legal and financial teams also learned that Bankman-Fried implemented what the two individuals described as a “backdoor” into FTX’s accounting system, which was built using custom software.

They said the “backdoor” allowed Bankman-Fried to execute commands that could alter the company’s financial records without alerting other people, including outside auditors.

This arrangement meant that the movement of $10 billion in funds to Alameda did not trigger internal compliance or accounting red flags at FTX, they said.

In his text message to Reuters, Bankman-Fried denied implementing a “backdoor.”

The US Securities and Exchange Commission is investigating FTX.com’s handling of customer funds, as well as its crypto-lending activities, a source with knowledge of the investigation told Reuters on Wednesday.

SEC Chairman Gary Gensler is also under fire for his agency’s failure to investigate the company before the crash despite earlier warning signs that its business practices were not up to par.