Sam Bankman-Fried, disgraced cryptocurrency boss, claimed that he didn’t steal funds and certainly didn’t stash billions of dollars away in his first response to the criminal charges against him last month.
Bankman-Fried stated that millions of customers of FTX could get their money back in a statement titled FTX pre-mortem overview and published on Substack. He also said that there was still a possibility of a “very substantial recovery” being made.
Bankman-Fried pleaded not guilty in criminal cases that he defrauded investors. He is currently being held on $250m bail at his California parents’ house.
Bankman-Fried claims that no funds were stolen. He also offers a timeline detailing the collapse of the exchange. This timeline blames Binance and market crashes for the implosion.
The US authorities are of a different opinion. The US attorney for New York’s southern district, Damian Williams, who is prosecuting Bankman-Fried has called the collapse “one the largest financial frauds in American History”.
Williams and other US authorities claim that Bankman-Fried, along with his associates, siphoned billions of dollars from FTX customer funds to purchase luxury properties, other investments and to support Alameda (a hedge fund also created by Bankman Fried).
Bankman-Fried claims that Alameda lost its money due to being unprepared for the fall of cryptocurrency markets and rising interest rate. He wrote, “And so Alameda’s assets get hit again and again.” “Alameda’s contagion reached FTX, and other places.”
FTX’s woes got worsened by a “fateful Tweet” by Binance chief executive Changpeng Zhao that set off a run on FTX’s FTT token. Bankman-Fried describes the move as a “targeted assault on assets held Alameda”, which followed a “very effective, long-running PR campaign against FTX”.
Bankman-Fried believes that the companies could have survived the storm if they had been given a few weeks more. Bankman-Fried claims that FTX was forced into bankruptcy by law firm Sullivan & Cromwell.
Bankman-Fried stated that Sullivan & Cromwell recommended John Ray III, a veteran bankruptcy specialist, to become the new CEO at FTX. Ray argued that FTX’s collapse was due to an “unprecedented, complete failure of corporate control”.
James Bromley was co-heading the restructuring practice at law firm Sullivan & Cromwell. He claimed that a substantial amount of assets of FTX Group “have been stolen or are missing” in court.
Two of Bankman-Fried’s most senior colleagues, Zixiao “Gary” Wang, FTX founder, and Caroline Ellison (ex-Alameda CEO), have pleaded guilty and are cooperating the authorities. They are not mentioned in Bankman-Fried’s post.
Bankman-Fried wrote that he had hoped that he could give his side at the congressional hearing on 13 December.
He wrote, “Unfortunately, DoJ [Department of Justice] moved me to arrest me the evening before, pre-empting all my testimony with an entirely new news cycle.”