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 one-time girlfriend, Caroline Ellison, as the sole CEO in 2022.
- Alameda’s and FTX’s problems were not 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 did not immediately respond to a request for comment.
Some of Bankman-Fried’s claims directly contradict allegations by US prosecutors that FTX customer 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.