Sam Bankman-Fried, the former crypto star turned alleged white-collar criminal, has spoken out for the first time since his arrest last month, publishing a lengthy blog post that appears to lay out his defense against fraud charges.
“I didn’t steal funds, and I certainly didn’t stash billions away,” he writes in a newly launched Substack.
Bankman-Fried is under house arrest at his parents’ home in Palo Alto, California, while awaiting trial. He pleaded not guilty to multiple federal counts of fraud and conspiracy related to the collapse of his crypto empire.
In what he calls a “pre-mortem overview” of FTX’s collapse, Bankman-Fried reiterates claims he made in November after the crypto exchange filed for bankruptcy and before he was arrested.
Among the key themes:
- He places blame squarely on Alameda, the crypto hedge fund he founded in 2017. “Alameda failed to sufficiently hedge against the risk of an extreme market crash: the hundred billion of assets had only a few billion dollars of hedges,” he says.
- He wasn’t in charge at Alameda. Bankman-Fried reiterates that he was not in charge of Alameda in the “past few years,” having appointed his onetime girlfriend, Caroline Ellison, as the sole CEO in 2022.
- Alameda’s and FTX’s problems weren’t unique, Bankman-Fried writes. He frequently contextualizes the firms’ decline as part of an industry-wide downturn that ensnared several other firms, including Three Arrows Capital, Voyager and Celsius — all of which were bankrupted in the so-called crypto winter, a broad decline in the value of digital assets, similar to a bear market.
- Alameda’s contagion then spread to FTX “because Alameda had a margin position open on FTX; and the run on the bank turned that illiquidity into insolvency.”
- FTX was pressured into filing for Chapter 11 by the law firm Sullivan & Cromwell, he says. “If FTX had been given a few weeks to raise the necessary liquidity, I believe it would have been able to make customers substantially whole,” he writes. ” I didn’t realize at the time that Sullivan & Cromwell…would potentially quash those efforts.” Representatives for Sullivan & Cromwell didn’t immediately respond to a request for comment.
Some of Bankman-Fried’s claims directly contradict allegations by US prosecutors that FTX customers funds were being siphoned to plug holes at Alameda in violation of FTX’s terms of service.
Key witnesses for the prosecution, including the former CEO of Alameda and FTX’s co-founder, have pleaded guilty and implicated Bankman-Fried in the misappropriation of customer funds.
Media press for details on bail
Separately Thursday, seven news organizations asked the judge in Bankman-Fried’s criminal case to make public the names of two individuals who co-signed on his $250 million bond.
“The public’s interest in this matter cannot be overstated,” lawyers representing the news outlets wrote in a letter to the court.
Four people, including Bankman-Fried’s parents, co-signed the bond, which won’t require payment unless he fails to appear in court or violates other terms set by the judge.
Bankman-Fried’s attorney has sought to keep the identities of the two non-parental co-signers sealed, arguing that their safety could be at risk.
The news organizations, including the Wall Street Journal, the Washington Post, and the Associated Press, said that argument was “wholly speculative” adding that Bankman-Fried failed to offer any compelling reasons to keep the names anonymous.
“The public…has an interest in knowing who it is that provided Mr. Bankman-Fried with financial backing following this alleged massive fraud and political scandal, particularly given Mr. Bankman-Fried’s close relationships with leaders of the financial industry, investors, prominent Silicon Valley billionaires, and elected representatives,” the letter said.
On Wednesday, the New York Times filed its own letter asking the judge to unredact the names from the bonds. Inner City Press also filed a separate letter.
The judge has given Bankman-Fried until January 19 to respond to the requests.
— CNN’s Kara Scannell contributed reporting.