New York CNN —
Sam Bankman-Fried, the former crypto star turned white-collar criminal suspect, has spoken out for the first time since his arrest last month, publishing a lengthy blog post that appears to detail his defense against fraud allegations.
“I haven’t stolen any funds, and I certainly haven’t hidden billions,” 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 has pleaded not guilty to multiple federal counts of fraud and conspiracy related to the collapse of his crypto empire.
In what he calls a “preliminary overview” of FTX’s collapse, Bankman-Fried reiterates claims he made in November after the crypto exchange filed for bankruptcy and before his arrest.
Among the key issues:
- He blames Alamedathe crypto hedge fund he founded in 2017. “Alameda failed to adequately hedge against the risk of an extreme market crash: the hundreds of billions in assets were only backed by a few billion dollars,” he says.
- He wasn’t in charge at Alameda. Bankman-Fried reiterates that he has not been in charge of Alameda for the “recent years” after naming his former girlfriend Caroline Ellison as sole CEO in 2022.
- Alameda and FTX’s problems weren’t unique, writes Bankman Fried. He often contextualizes the firms’ demise as part of an industry-wide downturn that has dragged along several other firms, including Three Arrows Capital, Voyager, and Celsius — all of which went bankrupt in the so-called crypto winter, a broad plunge in the value of digital assets similar to one bear market.
- Alameda’s contagion then spread to FTX “because Alameda had a margin position open on FTX; and the bank run turned that illiquidity into bankruptcy.”
- FTX was pressured by the law firm of Sullivan & Cromwell to file for Chapter 11, he says. “If FTX had had a few weeks to raise the necessary liquidity, I believe it would have been able to essentially complete clients,” he writes. “It was not clear to me at the time that Sullivan & Cromwell … might undo those efforts.” Sullivan & Cromwell officials did not immediately respond to a request for comment.
Some of Bankman-Fried’s claims directly contradict US prosecutors’ claims that funds were siphoned from FTX customers to plug holes in Alameda, in violation of FTX’s Terms of Service.
Key witnesses for the prosecution, including the former CEO of Alameda and co-founder of FTX, have pleaded guilty and implicated Bankman-Fried in embezzling client funds.