Bankman-Fried Denies Fraud Allegations
- Bankman-Fried believes FTX would have been solvent if he had continued leading the firm.
- The 30-year-old blamed the bear market and Changpeng Zhao’s negative PR campaign against FTX for the company’s failure.
- Bankman-Fried’s post did not address the cooperation of his close friends Gary Wang and Caroline Ellison with regulators in the case against him.
In a new Substack post, former FTX CEO Sam Bankman-Fried (SBF) has denied allegations that he stole users’ funds and stashed billions away for personal use. The under-fire businessman also denied allegations that he twisted the real story behind FTX’s collapse.
The post is the 30-year-old’s first significant response since he arrived in the US to face charges of fraud. Federal prosecutors charged Bankman-Fried with money laundering and fraud, but the FTX founder pleaded not guilty to all charges.
Bankman-Fried also took the chance to hit at Binance CEO Changpeng Zhao, accusing his rival of launching a “targeted attack” on Alameda, the hedge fund he co-founded. SBF believes the company’s failure was primarily due to the bear market and Zhao’s deliberate attack on FTX.
Zhao, however, dismissed such allegations in a tweet last month, writing that “FTX killed themselves […] because they stole billions of dollars.” Zhao admitted that Bankman-Fried had good intentions but “just made some mistakes.”
Bankman-Fried, in his post, also insisted that FTX could have survived the surprising fall and could still become solvent if he stayed on as the company’s leader. The businessman also claimed that FTX US had about $350 million in cash and was fully solvent when he filed for Chapter 11 bankruptcy. He also claimed that FTX International had almost $8 billion in assets when the new management team took charge.
Bankman-Fried allegedly suffered personal losses in FTX’s dramatic fall. The former FTX boss claimed to have had only $100,000 in his bank account after the company filed for bankruptcy and later used his parents’ home as a guarantee for his bail.
Bankman-Fried’s post also denied any involvement in the claims that Alameda had accessed FTX user funds without their knowledge or authorization, which are at the heart of the criminal charges brought against him. He said,
I didn’t steal funds, and I certainly didn’t stash billions away. Nearly all of my assets were and still are utilizable to backstop FTX customers.
Speaking on Alameda’s crash, Bankman-Fried said,
As Alameda became illiquid, FTX International did as well, because Alameda had a margin position open on FTX; and the run on the bank turned that illiquidity into insolvency. No funds were stolen. Alameda lost money due to a market crash it was not adequately hedged for–as Three Arrows and others have this year.
Bankman-Fried’s claims in his piece have been refuted by bankruptcy attorneys, federal prosecutors, and regulators. Authorities and attorneys claim that neither FTX nor Alameda were fully genuine companies but rather were used as tools in Bankman-Fried’s fraud.
Bankman-Fried’s close pals and longstanding executives, Caroline Ellison and Zixiao “Gary” Wang, both of whom pled guilty to counts of fraud, helped build the case against the FTX founder. Surprisingly, their help with federal investigations was not acknowledged in Bankman-Fried’s post.
Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.
