Home Business Sam Bankman-Fried issues a Substack newsletter to defend himself

Sam Bankman-Fried issues a Substack newsletter to defend himself


Fallen cryptocurrency founder Sam Bankman-Fried released a bulletin Thursday offering a detailed defense of his actions on the popular platform.

“I didn’t steal funds and I certainly didn’t hide billions,” Bankman-Fried said of how he ran FTX, the now-defunct cryptocurrency firm accused of misappropriating millions of customers’ money.

It was his biggest public defense since the Justice Department filed eight counts of fraud, money laundering and other charges against Bankman-Fried last month, and the Securities and Exchange Commission and Commodity Futures Trading Commission filed related civil complaints. Collectively, they described the chief executive as long using client money to finance his own risky investments, personal purchases and campaign donations at FTX.

Bankman-Fried has pleaded not guilty to charges brought by the Department of Justice by the United States Attorney for the Southern District of New York. He is currently under house arrest at his parents’ home in Palo Alto, California, and will be arraigned on the charges later this year.

Bankman-Fried did not return a message seeking comment, nor did her attorney, Mark Cohen. A spokesman for the Southern District of New York declined to comment.

Bankman-Fried’s comments on Thursday came via a post on a new account on Substack, the newsletter platform she created. The missive offered more details to back up what the 30-year-old former CEO said in media interviews before his arrest in December, which he denied knowingly did anything unethical or illegal.

Bankman-Fried wrote Thursday that FTX’s post-bankruptcy financial picture was less bleak than many of the company’s legal and government critics claimed.

For example, “FTX US is fully solvent and always has been,” writing about the company’s American division. “It was ridiculous that FTX US users weren’t completely covered and still haven’t gotten their money back.”

While attorneys for the restructured FTX said in bankruptcy court Tuesday that they have recovered about $5 billion to help pay back creditors, they say the process is far from straightforward.

John J. Ray, the veteran bankruptcy attorney brought in to clean up FTX, said it would take months to track down the many accounts and subsidiaries amid a string of incomplete bookkeeping. And according to the investigators, it is impossible to calculate the $8 billion.

Bankman-Fried says he was careless at FTX. Prosecutors say it was a hoax

With so many customers waiting for money they couldn’t get, Bankman-Fried described the losses as simply the ups and downs of the markets, not any crime.

“No funds were stolen. Alameda lost money due to a market crash that was not adequately hedged,” he wrote, detailing the company’s investment strategy and path to bankruptcy.

Although Alameda is a firm run by people he helped found and is close to, Bankman-Fried tried to portray FTX as a discrete victim of Alameda’s problems, similar to how many independent crypto companies have been affected by the broader contagion. market.

“FTX was affected [by the Alameda challenges] Voyager and others as before,” he wrote, referring to another cryptocurrency company, Terraform Labs, which went under last summer due to a write-off.

But the SEC called Bankman-Fried the “ultimate decision maker” in Alameda in its complaint. He also alleged that FTX made “undisclosed venture capital investments, lavish real estate purchases and large political donations” with client deposits to its sister firm, painting a picture of a company that was far from a helpless bystander in Alameda’s troubles.

To help their case, prosecutors have the help of former Bankman-Fried associates Caroline Ellison and Gary Wang, both of whom have pleaded guilty and are cooperating with the government.

Bankman-Fried gave a series of interviews after the bankruptcy, including a lengthy session with ABC’s George Stephanopoulos. He is there too he continued to tweet since he was indicted by prosecutors in the SDNY a month ago.

It was consistent throughout the story: O he says Little does Alameda know, let alone control, its funds. And he would try to help people get their money back.

Thursday’s mission continued this theme. “I dedicate almost all of my personal assets to clients,” he wrote, without explaining how that would work or what it meant.

But he also offered more financial detail than he had in previous statements. Bankman-Fried focused on how Alameda went bankrupt and largely chose to ignore the allegations against him — that he illegally used money from FTX clients to prop up a hedge fund.

Bankman-Fried wrote in a Substack post that she wanted to set the record straight with her testimony before the House Financial Services Committee on Dec. 13. with a completely different news cycle,” he wrote of his arrest in the Bahamas, where he was living at the time and where the FTX was based.

While Bankman-Fried tried to portray herself as a helpful figure Thursday, Ray said the mess was the chief executive’s own doing.

“Never in my career have I seen such a complete failure of corporate control and such a complete absence of reliable financial information,” he said last month of how FTX and Alameda were run under Bankman-Fried.

Legal experts have repeatedly said the cryptocurrency chief’s press statements were a bad idea, providing fodder for prosecutors to recreate timelines and use comments against him.

It wasn’t clear if Substack was being introduced as an ongoing newsletter or a one-off update, but Bankman-Fried concluded her post by noting what readers can expect. more than his writings.

“I have more to say,” he wrote. “But at least it’s a start.”

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