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Sam Bankman-Fried makes first detailed response to fraud charges

Sam Bankman-Fried makes first detailed response to fraud charges

Sam Bankman-Fried makes first detailed response to fraud charges

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Disgraced cryptocurrency executive Sam Bankman-Fried made his first detailed response to the criminal charges against him last month on Thursday, saying the millions of customers of his collapsed exchange, FTX, could still get their money back. .

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In a statement on Substack, Mr Bankman-Fried said a “very substantial recovery remains potentially available”.

“I didn’t steal funds, and I certainly didn’t hide billions,” he wrote. “Almost all of my assets were and still are usable to support FTX clients.”

His statement came a day after FTX bankruptcy attorneys said in court that they had recovered at least $5 billion in funds. Mr. Bankman-Fried cited the announcement in an attempt to bolster his argument that FTX customers could still be made “essentially whole.” It was unclear if he checked his statement with his legal team before publishing it.

FTX filed for bankruptcy in November after a run on customer deposits exposed an $8 billion hole in its accounts. Mr Bankman-Fried, 30, was then arrested last month at his home in the Bahamas, where FTX was based, and promptly extradited to the United States. Manhattan federal prosecutors have charged him with fraud, money laundering and campaign finance violations.

Authorities say Mr. Bankman-Fried embezzled billions of dollars in deposits from FTX clients and used the funds to buy luxury real estate, invest in other companies, make political contributions and fund crypto trading -currency at Alameda Research, the hedge fund he also owned. .

The FTX founder was released last month on $250 million bail under strict conditions that require him to remain confined to his parents’ home in Palo Alto, California. In a brief New York court appearance last week, he pleaded not guilty to the criminal charges.

A spokesman for Damian Williams, the US attorney for the Southern District of New York who is suing Mr Bankman-Fried, declined to comment.

A spokesperson for Mr. Bankman-Fried and his legal team declined to comment.

Mr. Bankman-Fried’s statement on Thursday reiterates a narrative he has previously advanced — and which U.S. prosecutors, regulators and industry experts have emphatically rejected. The post featured a detailed timeline of Alameda’s financial situation, which was closely tied to FTX, saying the company had lost money following a stock market crash it was not prepared for.

Bankman-Fried’s statement also attributed FTX’s failure in part to an attack by its biggest rival, Binance.

“No funds were stolen,” he wrote.

But even as he described Alameda’s finances, Mr Bankman-Fried also claimed he had not run the company “for the past few years” and did not have access to all its financial information. Regulators and prosecutors have argued that he was in fact intimately involved in running Alameda and orchestrated a scheme that allowed the company to borrow essentially an unlimited amount from the pool of customer deposits. from FTX.

His statement did not address the guilty pleas of two of his former top executives, Caroline Ellison and Gary Wang, who are both cooperating with prosecutors. Ms. Ellison, who once dated Mr. Bankman-Fried, was the head of Alameda when the company collapsed, and Mr. Wang founded FTX with Mr. Bankman-Fried.

On Wednesday, an FTX bankruptcy attorney told a federal judge that the exchange had recovered more than $5 billion in cash and crypto assets, far more than the company had previously said it had on hand. . The announcement raised hopes that FTX might be able to return money to its millions of creditors and customers around the world.

Andrew Dietderich, an attorney at law firm Sullivan & Cromwell, also told the FTX bankruptcy judge in Delaware that the legal team had identified more than nine million client accounts at the crypto exchange.

In an email after the bankruptcy hearing, Dietderich said of the $5 billion in newly recovered assets, about $1.7 billion was in cash.

He said the newly recovered assets did not include about $20 million in cash and $484 million in shares of online trading company Robinhood that federal prosecutors had seized from a separate company that Mr. Bankman- Fried had created in Antigua. He also said that FTX’s new management believes Robinhood shares and seized cash should ultimately be distributed to FTX’s creditors.

FTX is also considering whether it can sell around $4.6 billion of investments the company had made in other businesses, mostly crypto companies.

In his Thursday statement, Bankman-Fried said he had previously offered to “tender substantially all of my personal shares in Robinhood to clients” if FTX would agree to help pay his legal fees. He recently filed a petition in bankruptcy court arguing that these shares are his personal property and that he must sell some of them to pay his lawyers.

After the collapse of FTX, Mr. Bankman-Fried gave a series of interviews about the implosion. But since being released on bail last month, he has remained relatively silent, except for a some tweets, so far. He had a handful of visitors at his parents’ house, including author Michael Lewis, who is writing a book about him; crypto YouTube personality Tiffany Fong; and journalist for the online publication Puck.

In his message, Mr Bankman-Fried said he had hoped to respond in detail to the allegations against him much earlier, beginning with testimony he had planned to give to the House Financial Services Committee on December 13.

“Unfortunately, the DOJ decided to arrest me the night before, preempting my testimony with an entirely different news cycle,” he wrote, referring to the Justice Department.

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