Sam Bankman-Fried Issues First Response to FTX Case, Says He Didn’t Steal Funds
The founder and former CEO FTX, Sam Bankman-FriedIn his first statement after his arrest in the Bahamas, he promised customers that they would get their money back.
“I didn’t steal funds, and I certainly didn’t stash billions away,” In a Jan. 12th Statement, Bankman-Fried stated On his Substack blog Titled “FTX Pre-Mortem Overview.”
“No funds were stolen,” he claimed, as he presented a timeline of events leading to FTX’s downfall in November on his blog.
After pleading guilty to the charges, the former crypto boss made his first detailed statements. Criminal charges filed against him in federal court last month.
He stated that there was a good chance that millions of FTX customers would be able to get their money back. “very substantial” “remains potentially available.”
Feds Continue With Trial Against FTX Ex-Top Executives
Eight criminal charges have been brought against Bankman Fried by federal prosecutors, and additional civil charges have been brought by Securities and Exchange Commission (SEC).
Damian Williams, U.S. attorney for the Southern District of New York has accused Bankman Fried of presided over the collapse in “one of the biggest financial frauds in American history.”
Federal officials accuse Bankman-Fried and his former colleagues of siphoning off billions of dollars of customers’ assets from FTX and spending it on luxury properties, venture investments, political contributions, or funneling it into his hedge fund Alameda Research.
Bankman-Fried posted a $250 million bail and is currently under house arrest at his parents’ home in Palo Alto, California, while he awaits his trial set for October.
He continues to deny all claims that he defrauded investors and noted that he even lacks access to the passwords to FTX’s systems.
Bankman-Fried Accuses Binance CEO of His Downfall
Bankman-Fried blamed a combination of market crashes, mismanagement at his hedge fund Alameda Research, and sabotage by his main rival, Changpeng “CZ” Zhao, CEO of Binance’s crypto exchange.
“Over the course of 2021, Alameda’s balance sheet grew to roughly $100 billion of net asset value, $8 billion of net borrowing (leverage), and $7 billion of liquidity on hand.” Bankman-Fried.
Alameda did not anticipate the fall in cryptocurrency markets, and the rise of interest rates. The main problem caused the collapse of the company’s value by causing it 80 percent loss and eventual collapse.
“Alameda failed to sufficiently hedge its market exposure. Over the course of 2022, a series of large broad market crashes came–in stocks and in crypto–leading to a ~80 percent decrease in the market value of its assets,” He stated.
He later said that a fatal crash precipitated by the CEO of Binance led to the hedge fund’s insolvency, and he accused Zhao of maliciously planning a “targeted attack on assets held by Alameda.”
Bankman-Fried blamed Zhao’s “extremely effective months-long PR campaign against FTX” His “fateful tweet” that initiated a run on FTX’s FTT token, which caused the final meltdown of the exchange.
“As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books,” Zhao said in his fatal tweet.
“Alameda’s assets get hit, again and again and again,” According to the ex-FTX chief,
An ex-CEO distances himself from two former top lieutenants
Bankman-Fried claimed that he wasn’t involved in the alleged theft. “Alameda for the past few years,” He also distanced himself from the FTX hedge-fund spinoff that he co-founded alongside his ex-girlfriend Caroline Ellison.
Ellison and Sam Trabucco were named co-CEOs of Alameda by Bankman-Fried in October 2021, but she was the sole one in charge of the hedge fund when it collapsed in November after Trabucco stepped down in August.
FTX co-founder Zixiao “Gary” Wang and Ellison have reportedly pled guilty to several federal charges and are now cooperating with prosecutors to testify against Bankman-Fried, who maintains his innocence against all eight counts against him.
Bankman-Fried claimed that “Alameda’s contagion spread to FTX and other places,” Just as Three Arrows failed, so did exchanges such as Voyager and Genesis, BlockFi, BlockFi, Gemini.
The SEC however, in its complaint, stated that he was in fact, “the ultimate decision-maker” Alameda and could never pass on the blame.
Bankman-Fried said that there was still money that could be accounted for
Meanwhile, the ex-CEO reiterated his long-standing claim that FTX U.S. at the time it filed for Chapter 11 bankruptcy was still solvent. “remains fully solvent and should be able to return all customers’ funds.”
He stated that it was “ridiculous that FTX U.S. users haven’t been made whole and gotten their funds back yet.”
At its peak, the crypto exchange was worth an estimated $35 billion.
Bankman-Fried stated, FTX International is still “has many billions of dollars of assets” And that “even now, I believe that if FTX International were to reboot, there would be a real possibility of customers being made substantially whole.”
He wrote that FTX International had around $8 billion in assets when it filed for bankruptcy, but the crypto exchange’s new court-appointed leadership said that they were only able to recover just over $5 billion in liquid assets.
Bankman-Fried said that he received an audit report that confirmed his analysis of the firm’s financial standing, but he failed to note if this was a full audit by a Big 4 accounting firm.
He also allegedly implied that more funding could be used to offset billions of dollars in losses, but with no associated liabilities.
“There were billions of dollars of funding offers when Mr. Ray took over, and more than $4 billion that came in after,” He said so.
Bankman-Fried attacks Bankruptcy Lawyers for mismanaging his Efforts To Save FTX
Reports say that the former CEO is ripping into law firm Sullivan & Cromwell which represented FTX U.S. prior to its Chapter 11 filing. The Wall Street Journal.
Bankman-Fried accused law firm of pushing FTX into bankruptcy “strong-arming and threatening” He will name John J. Ray III, a bankruptcy specialist, as his new CEO.
He argued that FTX’s holdings could have weathered the storm if it had a few more weeks, but that the attorneys unnecessarily pressured them into bankruptcy prematurely.
Ray claimed that the collapse of the crypto exchange was due to an “unprecedented and complete failure of corporate controls,” The Guardian.
James Bromley was an attorney who handles bankruptcies for Sullivan & Cromwell. He also stated during a court hearing, “A…” “substantial amount” of FTX Group’s assets “have either been stolen or are missing.”
Bankman-Fried wrote that he intended to deliver his side of the story to a House committee hearing that was scheduled for Dec. 13, but was unable to appear due to his arrest the day before.
“Unfortunately, the DoJ [Department of Justice] moved to arrest me the night before, preempting my testimony with an entirely different news cycle,” He noted.
Bryan S. Jung, a New York City native and resident, has a background in politics as well as the legal industry. He graduated from Binghamton University.
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