It was his biggest public defense since the Department of Justice deposit eight counts of fraud, money laundering and other charges against Bankman-Fried last month, and the Securities and Exchange Commission and Commodity Futures Trading Commission filed related civil complaints. Collectively, they described the executive as a long-time user of FTX client money to fund his own risky investments, personal purchases and campaign donations.
Bankman-Fried has pleaded not guilty to the Justice Department charges brought by the U.S. Attorney for the Southern District of New York. He is currently under house arrest at his parents’ home in Palo Alto, Calif., and is expected to stand trial on those charges later this year.
Bankman-Fried did not respond to a message seeking comment, nor did his attorney, Mark Cohen. A spokesperson for the Southern District of New York declined to comment.
Bankman-Fried’s comments on Thursday came via a post on a new account on Substack, the newsletter platform he created. The missive offered more details to back up the 30-year-old former CEO’s sentiments in a series of media interviews before him. was arrested in Decemberappearances during which he also denied knowingly doing anything unethical or illegal.
Bankman-Fried wrote on Thursday that FTX’s financial situation after the bankruptcy was less grim than the company’s many legal and government critics claimed.
For example, “FTX US is fully creditworthy and always has been,” he wrote of the company’s US division, claiming that it was “ridiculous that FTX US users hadn’t been reinstated and hadn’t recovered their funds yet.”
But while lawyers for the restructured FTX said in bankruptcy court on Wednesday that they had recovered some $5 billion to help repay creditors, they say the process is not straightforward.
John J. Ray, the veteran bankruptcy executive brought in to try to clean up FTX, said tracking down the swarm of accounts and subsidiaries amid a slew of incomplete books would take months. And no less than 8 billion dollars can not be counted, according to investigators.
As dozens of customers wait for their money, which they have been unable to access, Bankman-Fried described the losses as simply a matter of market ups and downs, not criminality.
No funds were stolen. Alameda lost money due to a stock market crash for which it was not adequately hedged,” he wrote, detailing that company’s investment strategy and path to insolvency. .
Although Alameda is a company he helped found and is run by people he has remained close to, Bankman-Fried has sought to cast FTX as a quiet victim of Alameda’s problems, the same way that a host of independent crypto companies have been hit by a wider contagion in the market.
FTX has been impacted [by the Alameda challenges] like Voyager and others were earlier,” he wrote, referring to the crypto asset manager who gone under last summer due to the fall in the values of another crypto company, Terraform Labs.
But the SEC in its complaint called Bankman-Fried “the ultimate decision maker” at Alameda. He also alleged that he made “undisclosed venture capital investments, lavish real estate purchases and large political donations” with customer deposits to sister company FTX, painting a picture of a company that was far from a helpless bystander in Alameda’s troubles.
To help their case, prosecutors have the help of former Bankman-Fried associates Caroline Ellison and Gary Wang, who both pleaded guilty and are cooperate with the government.
Bankman-Fried gave a series of interviews after the bankruptcy, including a long session with ABC’s George Stephanopoulos. He also has continued to tweet Since being charged a month ago by SDNY prosecutors.
The narrative was consistent throughout: He he said has little knowledge, let alone control, of Alameda funds. And he was trying to help people get their money back.
Thursday’s missive continued this theme. “I dedicate almost all of my personal assets to clients,” he wrote, without explaining how it would work or what it would mean.
But he also provided more financial details than in previous statements. Bankman-Fried focused on how Alameda became insolvent and mostly chose to ignore the scope of the allegations against him – that he illegally used FTX client money to back the hedge fund.
Bankman-Fried wrote in the Substack post that he was looking to set the record straight with the testimony he was ready to give the House Financial Services Committee on Dec. 12. 13. “Unfortunately, the DOJ decided to arrest me the night before, preempting my testimony with an entirely different news cycle,” he wrote of his arrest in the Bahamas, where he was living at the time. and where FTX was based.
While Bankman-Fried on Thursday tried to cast himself as a helpful figure, Ray said the mess was the executive’s fault.
“Never in my career have I seen such a complete failure of corporate controls and such a total absence of reliable financial information,” he said. said last month of how FTX and Alameda operated under Bankman-Fried.
Legal experts have repeatedly said the crypto executive’s statements to the press were a bad idea, providing fodder for prosecutors to recreate timelines and use comments against him.
It wasn’t clear whether the substack was launched as an ongoing newsletter or a one-time update, but Bankman-Fried concluded his post by noting that readers can check out expect more of his writings.
“I have much more to say,” he wrote. “But at least it’s a start.”
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