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Comments amount to a preview of the defence case
NEW YORK — Sam Bankman-Fried said he did not steal money and blamed the collapse of his now-bankrupt FTX exchange on a broad crash in cryptocurrency markets, in a highly unusual blog post on Thursday, a month after his arrest on U.S. fraud charges.
Federal prosecutors in Manhattan in December said Bankman-Fried stole billions of dollars from FTX customers to pay debts for his crypto-focused hedge fund, Alameda Research, purchase lavish real estate, and donate to U.S. political campaigns.
He has pleaded not guilty. The Substack blog post — a rare public statement by a U.S. criminal defendant — amounts to a preview of the defence case Bankman-Fried may present when his trial begins on Oct. 2.
“I didn’t steal funds, and I certainly didn’t stash billions away,” Bankman-Fried wrote.
Defence lawyers typically advise clients to stay silent before trial because prosecutors may use their comments against them in court.
A spokesman for Bankman-Fried declined to comment. A spokesman for the U.S. Attorney’s office in Manhattan declined to comment.
In the post, Bankman-Fried did not directly address many of the other charges brought against him by federal prosecutors in Manhattan last month, namely that he misled investors and lenders about the financial conditions of FTX and Alameda. He wrote that he had “a lot more to say.”
The 30-year-old one-time billionaire wrote that Alameda failed to hedge against an “extreme” crash in the crypto markets, which ultimately came to pass last year.
“As Alameda became illiquid, FTX International did as well, because Alameda had a margin position open on FTX,” Bankman-Fried wrote.
Last month, two of his closest associates pleaded guilty to defrauding the trading platform’s customers and agreed to co-operate with prosecutors’ investigation.
Caroline Ellison, Alameda’s former chief executive, said in her plea hearing that Bankman-Fried and other FTX executives received billions of dollars in secret loans from Alameda.
Bankman-Fried was released on a US$250 million bond in December and put under house arrest at his parents’ Palo Alto, Calif. home, which was pledged as collateral for his return to court.
$5 billion recovered
In the post, Bankman-Fried also said FTX’s U.S. wing is “fully solvent” and that its international unit has many billions of dollars in assets.
“If it were to reboot I believe there is a real chance that customers could be made substantially whole,” he wrote.
The comments came after a lawyer for FTX on Wednesday told a federal bankruptcy court in Delaware that the exchange had located more than US$5 billion in liquid assets, and that the company plans to sell nonstrategic investments that had a book value of US$4.6 billion.
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That does not include assets seized by the Securities Commission of the Bahamas, where FTX was based and where Bankman-Fried lived before he was extradited to the United States. Bahamian authorities say they have seized US$3.5 billion, but FTX says those funds are worth as little as US$170 million.
On Wednesday night, Bankman-Fried replied on Twitter to a user named @wassielawyer who said a sale of the FTX exchange was viable. “Yup my sense is that is and always has been the best recovery scenario for customers,” wrote Bankman-Fried.
FTX declared bankruptcy on Nov. 11, the same day Bankman-Fried stepped down as its chief executive.© Thomson Reuters 2022
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