Sam Bankman-Fried launches a Substack newsletter to fight back

Sam Bankman-Fried launches a Substack newsletter to fight back


Fallen crypto founder Sam Bankman-Fried launched a newsletter on a popular platform on Thursday offering an elaborate defense of his actions.

“I didn’t steal funds, and I certainly didn’t keep billions,” Bankman-Fried said of how he ran FTX, his now-bankrupt cryptocurrency company, which has been accused of embezzling millions of clients’ money.

It was her 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 the Commodity Futures Trading Commission filed complaints. related civilians. Collectively, they portrayed the executive using longtime client money at FTX to fund his own risky investments, personal purchases and campaign donations.

Bankman-Fried has pleaded not guilty to the Justice Department charges, brought 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 tried on those charges later this year.

Bankman-Fried did not respond to 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 to a new account on Substack, the newsletter platform he created. The letter offered further details to back up sentiments the 30-year-old former chief executive expressed in a series of media interviews before he was arrested in December, appearances in which he also denied knowingly doing anything illegal or unethical.

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

For example, “FTX US is fully solvent and always has been,” he wrote of the company’s US division, saying that it was “ridiculous that FTX US users still haven’t recovered or gotten their funds back.”

But while lawyers for the restructured FTX said in bankruptcy court Wednesday that they had recovered about $5 billion to help pay off creditors, they say the process is not simple.

John J. Ray, the veteran bankruptcy executive hired to try to clean up FTX, has said that tracing the swarm of accounts and subsidiaries amid a slew of incomplete bookkeeping will take months. And up to $8 billion cannot be counted, according to the researchers.

Bankman-Fried says he was careless at FTX. Prosecutors say it’s a fraud

As dozens of clients wait for their money, which they have not been able to access, Bankman-Fried described the losses simply as a matter of ups and downs in the markets and not a crime.

“No funds were stolen. Alameda lost money due to a market downturn for which it did not adequately hedge,” he wrote, detailing that company’s investment strategy and path to insolvency.

Although Alameda was a company he helped found and was run by people he remained close to, Bankman-Fried tried to portray FTX as a quiet victim of Alameda’s woes, similar to how many other companies Crypto independents have been affected by a broader contagion in the market.

“FTX was affected [by the Alameda challenges] like Voyager and others before it,” he wrote, referring to the crypto asset manager who went bankrupt last summer due to falling values ​​in another crypto firm, Terraform Labs.

But the SEC in its lawsuit called Bankman-Fried “the top decision maker” at Alameda. It also alleged that it made “undisclosed venture investments, lavish real estate purchases and large political donations” out of client deposits to sister firm FTX, painting a picture of a company that was far from a helpless bystander in Alameda’s woes. .

To help their case, prosecutors enlist the help of former Bankman-Fried associates Caroline Ellison and Gary Wang, who 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 also has kept tweeting since he was indicted a month ago by SDNY prosecutors.

The narrative has been consistent throughout: He He says he has little knowledge, let alone control, of Alameda’s funds. And he would try to help people get their money back.

Thursday’s letter continued with that theme. “I am dedicating almost all of my personal assets to clients,” she wrote, without explaining how that would work or what it would mean.

But he also offered more financial details than in previous statements. Bankman-Fried focused on how Alameda became insolvent, choosing mostly to ignore the essence of the allegations against him: that he illegally used FTX client money to prop up the hedge fund.

Bankman-Fried wrote in the Substack post that she was trying to set the record straight with testimony she was going to give to the House Financial Services Committee on December 13. “Unfortunately, the DOJ took steps to arrest me the night before, pre-empting my testimony with a completely different news cycle,” he wrote of his arrest in the Bahamas, where he was living at the time and where FTX was headquartered.

While Bankman-Fried tried Thursday to present himself as a helpful figure, Ray has said the problem is the executive’s own doing.

“Never in my career have I seen such a complete failure of corporate controls 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 that the crypto executive’s press statements are a bad idea, as they provide fodder for prosecutors to recreate timelines and use comments against him.

It wasn’t clear if Substack was released as an ongoing newsletter or a one-time update, but Bankman-Fried concluded his post by noting that readers could expect more of his writings.

“I have so much more to say,” he wrote. “But at least this is a start.”

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