Funds

‘I Didn’t Steal Funds’: Bankman-Fried Debuts Newsletter—And Defense

Topline

Sam Bankman-Fried, the former billionaire facing a litany of criminal charges for alleged fraud in his now-bankrupt exchange FTX and the now-defunct trading firm Alameda Research, made his first public comments of 2023 on Thursday, launching a Substack to apparently sketch out his legal defense.

Key Facts

The 2,300-word post outlines the “pre-mortem” state of FTX from Bankman-Fried’s perspective, providing an overview of the supposed finances of the Bahamas-headquartered FTX International shortly before the company filed for bankruptcy in November and Bankman-Fried resigned as FTX’s chief executive.

Among his claims were that a broader market downturn ultimately led to FTX’s collapse and that he had little to do with Alameda’s operations, the latter of which has been disputed by the team overseeing FTX’s bankruptcy proceedings and by Alameda’s former CEO Caroline Ellison.

“I didn’t steal funds, and I certainly didn’t stash billions away,” Bankman-Fried wrote, directly opposing the guilty pleas from Ellison and FTX cofounder Gary Wang.

Bankman-Fried also repeated dubious assertions that FTX’s U.S. operations were fully solvent and remain so, despite the bankruptcy declaration, and that Binance CEO Changpeng Zhao is primarily responsible for Alameda’s insolvency.

Key Background

The blog post and related social media activity mark Bankman-Fried’s first public commentary outside of court since December 30. Arrested by Bahamian authorities in December and extradited to the U.S., Bankman-Fried faces eight criminal charges for allegedly funneling FTX customer funds to Alameda and for personal expenditures, including millions in political donations. The 30-year-old California native pleaded not guilty to all counts in New York federal court last week. Attorneys representing FTX said in court Wednesday the company has recovered more than $5 billion in liquid assets thus far in its bankruptcy process. Bankman-Fried claimed Thursday that “nearly all of my assets were and still are utilizable to backstop FTX customers.”

Chief Critic

Often candid on social media and in interviews, Bankman-Fried needs to “shut up,” Ira Sorkin, a lawyer who represented fellow notorious white collar criminal Bernie Madoff, said last month. “The only people that are going to listen to what you have to say are regulators and prosecutors.”

Tangent

Bankman-Fried’s Substack initially included an option to donate to him, Wall Street Journal reporter Caitlin Ostroff tweeted, prompting Bankman-Fried to respond: “Heh whoops that was unintentional, good catch—think there shouldn’t be a paying option anymore…”

Further Reading

Bankrupt FTX Has Recouped Over $5 Billion In Liquid Assets—But Still Has Billions More To Go To Meet Liabilities (Forbes)

Sam Bankman-Fried Pleads Not Guilty (Forbes)

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