For the first time since his arrest Sam Bankman-Fried gives an interview; the former crypto star turned suspected white-collar criminal Sam Bankman-Fried has spoken out, releasing a lengthy blog post that attempts to spell out his defense against fraud allegations.
“I didn’t steal funds, and I certainly didn’t store billions away,” he writes in a recently released Substack.
Bankman-Fried is awaiting trial while his parents are under house arrest in Palo Alto, California. After the downfall of his crypto empire, he was charged with various charges of fraud and conspiracy at the federal level, to which he pleaded not guilty.
Bankman-Fried, in a “pre-mortem assessment” of the demise of FTX, restates assertions he had made in November after the crypto exchange declared bankruptcy but before his arrest.
Some of the major ideas are:
- He is forthright in his criticism of Alameda, the cryptocurrency hedge fund he created in 2017. He argues, “Alameda failed to hedge against the risk of a dramatic market crash sufficiently: the hundred billion of assets had only a few billion dollars in hedges.”
- On Alameda, he had no authority. Bankman-Fried states once again that he has not been CEO of Alameda for the “last several years,” even though in 2022, he made his ex-girlfriend Caroline Ellison the company’s sole CEO.
- Bankman-Fried claims that the issues faced by Alameda and FTX could be more exceptional. He often places the companies’ decline in the broader context of the industry downturn that ensnared other companies like Three Arrows Capital, Voyager, and Celsius, which all went bankrupt during the so-called crypto winter, a widespread decline in the value of digital assets similar to a bear market.
- “Because Alameda had a margin position open on FTX, and the run on the bank turned that illiquidity into insolvency,” the article states, explaining how the contagion from Alameda reached FTX.
- He claims that FTX’s legal representation, Sullivan & Cromwell, pushed the company into Chapter 11. FTX “would have been able to make clients substantially whole” if allowed “a few weeks to raise the requisite capital,” he argues. I could have foreseen that Sullivan & Cromwell… may derail our efforts. There was no immediate comment from Sullivan & Cromwell representatives.
Some Bankman-comments Fried’s contradict US prosecutors’ claims that FTX customers’ money was being diverted to Alameda to fix leaks.
Former Alameda CEO and FTX co-founder both plead guilty, implicating Bankman-Fried in the theft of customer funds and providing crucial testimony for the prosecution.