Sam Bankman-Fried Makes First Detailed Response to Fraud Charges

Sam Bankman-Fried, the disgraced cryptocurrency govt, on Thursday made his first detailed response to the prison costs filed towards him final month, arguing that the thousands and thousands of consumers of his collapsed change, FTX, might nonetheless get their a reimbursement.

In an announcement revealed on Substack, Mr. Bankman-Fried stated that “very substantial restoration stays probably accessible.”

“I didn’t steal funds, and I actually didn’t stash billions away,” he wrote. “Practically all of my belongings have been and nonetheless are utilizable to backstop FTX prospects.”

His assertion got here a day after the attorneys overseeing FTX’s chapter stated in courtroom that they’d recovered not less than $5 billion in funds. Mr. Bankman-Fried cited that announcement to attempt to bolster his case that FTX prospects might nonetheless be made “considerably entire.” It was not clear whether or not he had vetted his assertion along with his authorized crew earlier than publishing it.

FTX filed for chapter in November after a run on buyer deposits uncovered an $8 billion gap in its accounts. Mr. Bankman-Fried, 30, was then arrested final month at his residence within the Bahamas, the place FTX was primarily based, and swiftly extradited to the USA. Federal prosecutors in Manhattan have charged him with fraud, cash laundering and marketing campaign finance violations.

The authorities declare that Mr. Bankman-Fried siphoned billions of {dollars} in buyer deposits from FTX and used the funds to buy luxurious actual property, put money into different firms, make political contributions and fund cryptocurrency buying and selling at Alameda Analysis, the hedge fund he additionally owned.

The FTX founder was launched final month on a $250 million bond underneath strict circumstances that require him to stay confined to his mother and father’ residence in Palo Alto, Calif. In a quick courtroom look in New York final week, he pleaded not responsible to the prison costs.

Mr. Bankman-Fried’s assertion on Thursday reiterates a story he has superior earlier than — and that U.S. prosecutors, regulators and trade consultants have roundly rejected. The submit laid out an in depth timeline of the monetary scenario at Alameda, which was carefully tied to FTX, arguing that the agency misplaced cash because of a market crash that it was unprepared for.

Mr. Bankman-Fried’s assertion additionally blamed FTX’s failure partly on an assault by its largest rival, Binance.

“No funds have been stolen,” he wrote.

However whilst he outlined Alameda’s funds, Mr. Bankman-Fried additionally asserted that he hadn’t run the agency “for the previous few years” and didn’t have entry to all its monetary info. Regulators and prosecutors have argued that he was the truth is intimately concerned in Alameda’s administration and orchestrated a system that allowed the corporate to borrow primarily a limiteless amount of cash from FTX’s pool of buyer deposits.

His assertion didn’t handle the responsible pleas from two of his former prime executives, Caroline Ellison and Gary Wang, each of whom are cooperating with prosecutors. Ms. Ellison, who as soon as dated Mr. Bankman-Fried, was the top of Alameda when the agency collapsed, and Mr. Wang based FTX with Mr. Bankman-Fried.

On Wednesday, a chapter lawyer for FTX advised a federal decide that the change had recovered greater than $5 billion of money and crypto belongings — significantly greater than the corporate had beforehand stated it had readily available. The announcement raised hopes that FTX would possibly have the ability to return some cash to its thousands and thousands of collectors and prospects all over the world.

Andrew Dietderich, an legal professional with the legislation agency Sullivan & Cromwell, additionally advised the decide overseeing FTX’s chapter in Delaware that the authorized crew had recognized greater than 9 million buyer accounts on the crypto change.

In an electronic mail after the chapter listening to, Mr. Dietderich stated that of the $5 billion in newly recovered belongings, roughly $1.7 billion was in money.

He stated the newly recovered belongings didn’t embody roughly $20 million in money and $484 million in shares within the on-line buying and selling firm Robinhood that federal prosecutors had seized from a separate firm that Mr. Bankman-Fried arrange in Antigua. He additionally stated FTX’s new administration believes the Robinhood shares and the seized money in the end needs to be distributed to FTX collectors.

In his assertion on Thursday, Mr. Bankman-Fried stated he had beforehand provided “to contribute almost all of my private shares in Robinhood to prospects” if FTX agreed to assist him pay his authorized payments. He lately filed a movement in chapter courtroom arguing that these shares are his private property and that he must promote a few of them to pay his attorneys.

After FTX collapsed, Mr. Bankman-Fried gave a collection of interviews in regards to the implosion. However since he was launched on bail final month, he has been comparatively quiet, save for a few tweets, till now. He has entertained a handful of tourists at his mother and father’ residence, together with the creator Michael Lewis, who’s writing a e book about him; the crypto YouTube character Tiffany Fong; and a reporter for the web publication Puck.

In his submit, Mr. Bankman-Fried stated he had hoped to reply intimately to the allegations towards him a lot earlier, beginning with testimony he had deliberate to ship to the Home Monetary Companies Committee on Dec. 13.

“Sadly, the DOJ moved to arrest me the evening earlier than, pre-empting my testimony with a wholly completely different information cycle,” he wrote, referring to the Division of Justice.