- The former President of FTX US took shots at Sam Bankman-Fried. However, critics say he may not be telling the whole story.
- Critics point out an FDIC complaint against Harrison, saying that he falsely claimed that deposits in FTX US were insured.
- Moreover, one backer for Harrison’s new crypto venture is Anthony Scaramucci, a financier with close ties to SBF.
Brett Harrison, the former president of FTX US, came under the spotlight after sharing details about his role at FTX US and his relationship with Sam Bankman-Fried.
Harrison claimed that he knew nothing about potentially fraudulent activity at the company and that he initially believed working at FTX to be a “dream job.”
However, several people questioned the details of Harrison’s account of the FTX drama. Specifically, they point to an FDIC cease and desist letter to Harrison, which alleges that he falsely claimed that FTX US deposits were insured.
FDIC says that this could have caused harm to depositors. Moreover, his critics say that he must have known that they were not insured.
Moreover, Harrison’s FTX revelations come as he launches his own crypto venture. He already found backers, including Anthony Scaramucci, a financier and former Trump staffer with ties to FTX.
Harrison’s Attacks Against SBF – Former Colleague at Jane Street
In a lengthy Twitter thread, Harrison explained that he had a falling out with Bankman-Fried, which led him to resign.
Harrison, who had known SBF while working at the quantitative trading firm Jane Street, said SFB completely changed character as an FTX CEO.
His former student at Jane Street, whom he described as a “sensitive and intellectually curious person” who loved animals, later showed “total insecurity and intransigence” when anyone questioned his decisions.
According to Harrison, the former conscientious junior trader was later prone to respond with “dysregulated hostility,” “gaslighting,” and manipulation.”
He also alleges that his former colleague threatened to destroy his professional reputation if he did not follow. Harrison left the company on September 27, 2022, and started working on his crypto venture.
Eight weeks after his resignation, FTX, FTX US, and Alameda Research went bankrupt. Weeks later, the Department of Justice charged Bankman-Fried with money laundering and wire fraud.
Harrison Claims He Knew Nothing of Fraud – Critics Question His Account
Harrison attempted to distance himself from the fraud charges against SBF. He said that it is “clear” that the fraud was “held closely by Sam and his inner circle at FTX. com and Alameda.”
"I never could have guessed that underlying these kinds of issues," Harrison said, "was multi-billion-dollar fraud."
However, some people criticized his account of the story. Hedge fund manager and finance professor Patrick Boyle said that Harrison omitted one detail in his explanation.
“Brett doesn't mention or explain why he announced on Twitter on July 20th that deposits on FTX are stored in FDIC-insured accounts in the user's name. He must have (should have) known at the time that this was untrue,” Boyle said.
The allegations come from a Federal Deposit Insurance Corporation (FDIC) cease and desist letter to Harrison. The FDIC letter states that Harrison made statements on his professional Twitter account saying that consumer deposits benefited from deposit insurance.
FTX also identified itself as “FDIC insured,” the complaint wrote. These statements were “false and misleading,” according to the FDIC, Moreover, they were “likely to mislead, and potentially harm customers.”
FTX US depositors did not benefit from deposit insurance, FDIC said. Only deposits in registered banks did. This is why, after the FTX US bankruptcy, depositors could not access their funds. They are likely to lose everything.
Financier With Prior Ties to FTX Backs Harrison
Harrison did not address the FDIC complaint. Instead, he went on to focus on his crypto venture, a crypto trading software for large investors.
While acknowledging that his role in FTX’s collapse made raising money more difficult, he found at least one backer. Anthony Scaramucci, a financier with close ties to FTX, said he would invest in Harrison’s venture.
Scaramucci may have played an important role in providing SBF with the connections he needed to establish FTX as a trusted player. Moreover, FTX invested millions in Scaramucci SkyBridge Capital.
In a recent interview, Scaramucci said that he once considered SBF a friend. He also saw his fraud as a personal betrayal, which SBF would go to the “ninth circle of Hell” for. Scaramucci’s relationship with Harrison is still intact.
“It’s important to pick up and fight for your friends especially when they have had setbacks. Don’t walk away; be there and they will never forget,” Scaramucci tweeted shortly after announcing the investment in Harrison’s crypto project.
The FDIC complaint and his choice of backers raise some questions about Harrison’s role at FTX.
On the Flipside
- There is no proof that Harrison knew of any fraud or wrongdoing in FTX or FTX US.
- There is currently no news of any investigation against Harrison for his role as FTX US President.
Why You Should Care
Harrison’s story potentially highlights the inner workings of FTX, the collapse of which cost depositors billions.