Disgraced former chief of FTX, Sam Bankman-Fried, denied stashing billions and gave his take on what happened to his bankrupt crypto exchange in a lengthy new post on Substack published Thursday.
In it, he denied stealing funds and claimed the reason for FTX’s and sister company Alameda’s collapse was the crypto market meltdown and inadequate hedging on Alameda’s part.
“I didn’t steal funds, and I certainly didn’t stash billions away,” Bankman-Fried wrote. Later in the post, he concluded that “Alameda lost money due to a market crash it was not adequately hedged for.”
Bankman-Fried alleges his Alameda trading arm "failed to sufficiently hedge its market exposure" and goes on to say he hasn't run Alameda for the last few years.
Bankman-Fried faces federal fraud charges in the U.S. and is currently out on bail at his parents’ home in California. While he has pleaded not guilty to the charges, his lieutenant and Alameda chief Caroline Ellison pleaded guilty for fraud charges, and is now cooperating with an investigation in the Southern District of New York.
While casting the blame of FTX's downfall on Alameda's poor hedging, Bankman-Fried notably did not address the $65 billion line of credit he opened from the exchange to the trading arm, as revealed in a court hearing on Wednesday. At the hearing, a lawyer representing FTX in its Chapter 11 bankruptcy proceedings said the credit line has led to a "shortfall in value" in repaying customers and creditors.
In three instances throughout his note, Bankman-Fried calls Binance's announcement to withdraw funds from Alameda in early November a "targeted attack."
"The November crash was a targeted attack on assets held by Alameda, not a broad market move... As a result, the larger hedge that Alameda had finally put on that summer didn’t end up helping. It would have for every previous crash that year–but not for this one," Bankman-Fried wrote. "Over the course of November 7th and 8th, things went from stressful but mostly under control to clearly insolvent."
He insisted that FTX's U.S. arm remains solvent and can be used to repay customers. He also said he plans to use nearly all his personal assets to help customers who lost money and says he has "offered to contribute nearly all" of his personal Robinhood shares to customers.
Meanwhile, court filings show Bankman-Fried seeking to retain control of the roughly 56 million Robinhood shares (worth more than $400 million) to pay his legal fees.
Update (Jan. 12, 2023 14:54 UTC): Updates with additional detail throughout.
