Sam Bankman-Fried, Founder of FTX, Responds to Fraud Charges


Sam Bankman-Fried, the disgraced cryptocurrency government, on Thursday made his first detailed response to the felony prices filed towards him final month, arguing that the thousands and thousands of consumers of his collapsed alternate, FTX, may nonetheless get their a refund.

In a press release revealed on Substack, Mr. Bankman-Fried stated that “very substantial recovery remains potentially available.”

“I didn’t steal funds, and I certainly didn’t stash billions away,” he wrote. “Nearly all of my assets were and still are utilizable to backstop FTX customers.”

His assertion got here a day after the attorneys overseeing FTX’s chapter stated in courtroom that they’d recovered at the least $5 billion in funds. Mr. Bankman-Fried cited that announcement to attempt to bolster his case that FTX clients may nonetheless be made “substantially whole.” It was not clear whether or not he had vetted his assertion along with his authorized workforce 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 house within the Bahamas, the place FTX was based mostly, and swiftly extradited to the United States. 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, spend money on different firms, make political contributions and fund cryptocurrency buying and selling at Alameda Research, 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’ house in Palo Alto, Calif. In a short courtroom look in New York final week, he pleaded not responsible to the felony prices.

A spokesman for Damian Williams, the U.S. legal professional for the Southern District of New York, which is prosecuting Mr. Bankman-Fried, declined to remark.

A spokesman for Mr. Bankman-Fried and his authorized workforce declined to remark.

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 publish laid out an in depth timeline of the monetary state of affairs at Alameda, which was intently tied to FTX, arguing that the agency misplaced cash on account 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 were stolen,” he wrote.

But at the same time as he outlined Alameda’s funds, Mr. Bankman-Fried additionally asserted that he hadn’t run the agency “for the past few years” and didn’t have entry to all its monetary data. Regulators and prosecutors have argued that he was in reality intimately concerned in Alameda’s administration and orchestrated a system that allowed the corporate to borrow primarily a limiteless sum of money from FTX’s pool of buyer deposits.

His assertion didn’t deal with the responsible pleas from two of his former high 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 pinnacle of Alameda when the agency collapsed, and Mr. Wang based FTX with Mr. Bankman-Fried.

On Wednesday, a chapter lawyer for FTX instructed a federal choose that the alternate had recovered greater than $5 billion of money and crypto property — significantly greater than the corporate had beforehand stated it had available. The announcement raised hopes that FTX may have the ability to return some cash to its thousands and thousands of collectors and clients around the globe.

Andrew Dietderich, a lawyer with Sullivan & Cromwell, additionally instructed the choose overseeing FTX’s chapter in Delaware that the authorized workforce had recognized greater than 9 million buyer accounts on the crypto alternate.

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

He stated the newly recovered property 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 ought to be distributed to FTX collectors.

FTX is also taking a look at whether or not it may promote about $4.6 billion in investments the corporate had made in different companies, largely crypto firms.

In his assertion on Thursday, Mr. Bankman-Fried stated he had beforehand provided “to contribute nearly all of my personal shares in Robinhood to customers” if FTX agreed to assist him pay his authorized payments. He not too long ago filed a movement in chapter courtroom arguing that these shares have been his private property and that he wanted to promote a few of them to pay his attorneys.

Mr. Bankman-Fried additionally blames Sullivan & Cromwell, which had carried out authorized work for FTX earlier than the alternate’s collapse, with pressuring him to place the corporate out of business and letting a restructuring lawyer, John Jay Ray III, take over for him.

In his assertion, Mr. Bankman-Fried included excerpts from what seem like monetary statements and steadiness sheets for FTX. Mr. Ray, in a chapter courtroom submitting, savaged the former administration of FTX and stated there was “a complete failure of corporate control” and the corporate’s monetary statements shouldn’t be trusted.

Moira Penza, a former federal prosecutor now in non-public follow, stated Mr. Bankman-Fried’s publish was a present to prosecutors and certainly creating complications for his authorized workforce.

“The most powerful evidence a prosecutor can have is the defendant’s own words, and Bankman-Fried is giving the government a gift,” Ms. Penza stated. “If I were prosecuting the case, I would want him to keep talking, and if I were defending him I would be telling him to shut his mouth.”

After FTX collapsed, Mr. Bankman-Fried gave a collection of interviews concerning the implosion. But 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 holiday makers at his mother and father’ house, together with the creator Michael Lewis, who’s writing a guide about him; the crypto YouTube character Tiffany Fong; and a reporter for the web publication Puck.

In his publish, 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 House Financial Services Committee on Dec. 13.

“Unfortunately, the DOJ moved to arrest me the night before, pre-empting my testimony with an entirely different news cycle,” he wrote, referring to the Department of Justice.





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