Sam Bankman-Fried speaks out for the first time since his arrest

New York
CNN
—

Sam Bankman-Fried, the former crypto star turned alleged white collar criminalspoke out for the first time since his arrest last month, posting a lengthy blog post which appears to lay out his defense against the fraud charges.

“I didn’t steal funds, and I certainly didn’t hide billions,” he wrote in a Newly launched substack.

Bankman-Fried is under house arrest at his parents’ home in Palo Alto, Calif., pending trial. He has pleaded not guilty to several federal counts of fraud and conspiracy related to the collapse of his crypto empire.

In what he calls a “pre-mortem preview” of FTX’s collapse, Bankman-Fried reiterates claims he made in November after the crypto exchange filed for bankruptcy and before his arrest.

Among the key themes:

• He blames Alameda squarelythe crypto hedge fund he founded in 2017. “Alameda failed to sufficiently hedge against the risk of an extreme stock market crash: one hundred billion in assets only had a few billion dollars of cover,” he said.
• He wasn’t in charge at Alameda. Bankman-Fried reiterates that he was not in charge of Alameda for the “last few years,” after appointing his former girlfriend, Caroline Ellison, as sole CEO in 2022.
• Alameda and FTX’s issues weren’t unique, writes Bankman-Fried. He frequently contextualizes the companies’ decline as part of an industry-wide downturn that has ensnared several other companies, including Three Arrows Capital, Voyager and Celsius – all of which went bankrupt during the so-called crypto winter, a significant drop in the value of digital assets, similar to a bear market.
• The Alameda contagion then spread to FTX “because Alameda had an open margin position on FTX; and the run on the bank transformed this illiquidity into insolvency.
• FTX was forced to file for Chapter 11 by law firm Sullivan & Cromwell, he says. “If FTX had had a few weeks to raise the necessary cash, I believe it would have been able to make customers substantially whole,” he wrote. “I didn’t realize at the time that Sullivan & Cromwell… could potentially undo these efforts.” Representatives for Sullivan & Cromwell did not immediately respond to a request for comment.

Some of Bankman-Fried’s claims directly contradict US prosecutors’ allegations that FTX client funds were being diverted to plug holes at Alameda in violation of FTX’s terms of service.

Key witnesses for the prosecution, including the former CEO of Alameda and co-founder of FTX, pleaded guilty and implicated Bankman-Fried in the embezzlement of client funds.

Separately on Thursday, seven news organizations asked the judge in the Bankman-Fried criminal case to release the names of two people who co-signed his $250 million bond.

“The public interest in this case cannot be overstated,” the lawyers representing the media wrote in a letter to the court.

Four people, including Bankman-Fried’s parents, have co-signed the bond, which will not demand payment unless he fails to appear in court or violates other conditions set by the judge.

Bankman-Fried’s attorney sought to keep the identities of the two non-parental co-signers sealed, arguing that their safety could be at risk.

News agencies including The Wall Street Journal, The Washington Post and The Associated Press said the argument was “entirely speculative,” adding that Bankman-Fried had provided no compelling reason to keep the names anonymous.

“The public… has an interest in knowing who provided Mr. Bankman-Fried with financial support in the wake of this alleged massive fraud and political scandal, particularly given that Mr. Bankman-Fried’s close relationship with financial industry executives, investors, top Silicon Valley billionaires and elected officials,” the letter reads.

On Wednesday, The New York Times filed its own letter asking the judge not to redact the bond names. Inner City Press also filed a separate letter.

The judge gave Bankman-Fried until Jan. 19 to respond to the claims.

– CNN’s Kara Scannell contributed reporting.