Elon Musk says FTX founder set his BS meter off when he offered to back his Twitter purchase

Elon Musk has revealed that he turned down crypto mogul Sam Bankman-Fried’s offer to help fund his Twitter takeover last spring.

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

‘But then I got a lot of people telling me’ [that] he has, you know, huge amounts of money that he wants to invest in the Twitter deal,” recalls Musk, who raised billions in outside funding to support his $44 billion Twitter buyout.

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

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

Musk added, “Then I thought, man, everyone, including big investment banks — everyone talked about him like he’s walking on water and has a zillion dollars.”

‘And that [was] not my impression… that guy is just – something is wrong, and he has no capital, and he won’t get through it. That was my prediction,” Musk added.

Musk tweeted late into the night and also shared a crude meme depicting Bankman-Fried as the star of a porn movie titled “Man F***s 5 Million People At Once.”

Musk’s text messages, previously revealed in court files, confirm his memory.

They reveal that on April 25, when Musk first announced his agreement to acquire Twitter, his personal banker Michael Grimes shared Bankman-Fried’s offer to fund the venture.

Musk appears skeptical in the text messages, rejecting Bankman-Fried’s plans to use blockchain technology for Twitter and wondering if he had the money to back up his financing offer.

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on Saturday said it had seen “unauthorized transactions,” with analysts saying millions of dollars in assets had been withdrawn from the platform.

Blockchain analytics firm Elliptic said this morning that approximately $473 million worth of cryptoassets had been “extracted from FTX wallets under suspicious circumstances,” but could not confirm 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 to cold storage to mitigate damage from detecting unauthorized transactions.

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

Earlier on Saturday, Miller said in a tweet that he was “exploring abnormalities with wallet movements related to the consolidation of FTX balances on exchanges.”

In a separate development, about $2 billion of customers’ money has disappeared from the collapsed crypto exchange FTX, according to two people familiar with the matter.

Founder and CEO Sam Bankman-Fried has secretly transferred $10 billion in client money from FTX to trading company Alameda Research, run by his girlfriend Caroline Ellison, Reuters reports.

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

While FTX is known to have moved customer funds to Alameda, the missing funds are reported here for the first time.

The financial hole came to light in records Bankman-Fried shared with other senior executives last Sunday, the two sources said.

The archives provided an up-to-date picture 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 rescue deal with rival exchange Binance fell through, hastening the most notable crypto collapse in recent years.

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

“We weren’t secretly transferred,” he said. “We had confusing internal labeling and misread it,” he added, without elaborating.

When 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 “stitching together” what happened at FTX.

“I was shocked to see things unfold as they did earlier this week,” he wrote. ‘Soon I will write a more complete article one by one.’

At the heart of FTX’s problems were losses at Alameda that most FTX executives knew nothing about, Reuters previously reported.

Customer withdrawals surged last Sunday after Changpeng Zhao, CEO of giant crypto exchange Binance, said Binance would sell its entire stake in FTX’s digital token, worth at least $580 million, “due to recent disclosures.”

Four days earlier, news channel CoinDesk reported that much of Alameda’s $14.6 billion in assets were in the token.

That Sunday, Bankman-Fried met with several executives in the Bahamas’ capital Nassau to calculate how much outside funding 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 company’s regulatory and legal teams showing that FTX had moved about $10 billion in customer funds from FTX to Alameda, the two people said.

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

The documents revealed that between $1 billion and $2 billion of these funds were not accounted for under Alameda’s assets, the sources said.

The spreadsheets didn’t indicate where this money was being moved, and the sources said they don’t know what became of it.

In a subsequent investigation, FTX’s legal and finance teams also found that Bankman-Fried had implemented what the two people described as a “backdoor” into FTX’s accounting system, which was built with custom software.

They said the “back door” allowed Bankman-Fried to execute jobs that could alter the company’s financials without warning other people, including outside accountants.

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

In his text to Reuters, Bankman-Fried denied a “back door.”

The U.S. Securities and Exchange Commission is investigating how FTX.com handles client funds, as well as its crypto lending business, a source with knowledge of the investigation told Reuters on Wednesday.

SEC chairman Gary Gensler has also been criticized for his agency’s failure to investigate the company prior to the crash, despite previous warning signs that its business practices were not up to par.