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Sam Bankman-Fried Issues First Response to FTX Case: ‘I Didn’t Steal Funds’

The founder and former CEO of FTX, Sam Bankman-Fried, promised that customers could get their money back in his first statement since his arrest in the Bahamas.

“I didn’t steal funds, and I certainly didn’t stash billions away,” Bankman-Fried said in a Jan. 12th statement 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.

The former cryptocurrency boss gave his first detailed statement after pleading not guilty to the criminal charges filed against him in federal court last month.

He wrote that the chances that millions of FTX customers would get their money back was  “very substantial” and “remains potentially available.”

Feds Proceed With Trial Against FTX Former Top Executives

Eight criminal charges have been filed by federal prosecutors against Bankman-Fried, along with additional civil charges brought by the Securities and Exchange Commission (SEC).

Damian Williams, the U.S. Attorney for the Southern District of New York, has accused Bankman-Fried of presiding 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 Blames Binance CEO for 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, the CEO of the crypto exchange Binance.

“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.” wrote Bankman-Fried.

He said the main problem was when Alameda failed to anticipate the downturn in the cryptocurrency markets and the rise in interest rates, causing it to lose 80 percent of its value and its 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 said.

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” and 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 stated in his fatal tweet.

“Alameda’s assets get hit, again and again and again,” claimed the former FTX chief.

Former CEO Distances Himself From His Two Top Former Lieutenants

Bankman-Fried also claimed that he was not involved with “Alameda for the past few years,” and he distanced himself from the FTX hedge fund spin off that he co-founded with 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 said that “Alameda’s contagion spread to FTX and other places,” just as the failure of Three Arrows impacted exchanges like Voyager, Genesis, Celsius, BlockFi, and Gemini.

However, the SEC in its complaint said that, in the end, he was “the ultimate decision-maker” at Alameda and could not pass on blame.

Bankman-Fried Said That There Is Still Money That Can Be Accounted For

Meanwhile, the former CEO repeated his longstanding claim that FTX U.S. was still solvent at the time of its Chapter 11 bankruptcy and that it “remains fully solvent and should be able to return all customers’ funds.”

He said that it was “ridiculous that FTX U.S. users haven’t been made whole and gotten their funds back yet.”

The crypto exchange at its height was valued at an estimated $35 billion in total assets.

Bankman-Fried stated that FTX International 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 apparently then alluded that more funding could have been used to offset the billions of dollars lost, with no attached liabilities.

“There were billions of dollars of funding offers when Mr. Ray took over, and more than $4 billion that came in after,” he claimed.

Bankman-Fried Attacks Bankruptcy Attorneys for Mismanaging His Efforts to Save FTX

The former CEO has been slamming the law firm Sullivan & Cromwell, which represented FTX U.S. before its Chapter 11 filing, reported The Wall Street Journal.

Bankman-Fried accused the law firm of pressuring FTX into bankruptcy while “strong-arming and threatening” him to name bankruptcy specialist John J. Ray III as the 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 has claimed that the crypto exchange collapsed due to an “unprecedented and complete failure of corporate controls,” reported The Guardian.

James Bromley, an attorney in charge of handling bankruptcies at Sullivan & Cromwell, also noted during a court hearing that 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 Jung

Bryan S. Jung is a native and resident of New York City with a background in politics and the legal industry. He graduated from Binghamton University.

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