Sam Bankman-Fried, the disgraced cryptocurrency industry executive, issued his first detailed response on Thursday to the criminal charges filed against him last month, arguing that the millions of customers of his bankrupt exchange, FTX, could still get their money back.
In a statement posted on Substack, Mr Bankman-Fried said a “very significant recovery remains possible eventually”.
“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 customers. »
His statement came a day after attorneys overseeing FTX’s bankruptcy told the court they had recovered at least $5 billion in funds.
Mr. Bankman-Fried cited this announcement to try to support his thesis that FTX clients could still be “substantially spared”. It was unclear whether he checked his statement with his legal team before releasing 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 arrested last month at his home in the Bahamas, where FTX was based, and was soon extradited to the United States. Federal prosecutors in Manhattan have charged him with fraud, money laundering and violation of campaign finance rules.
Authorities say Mr. Bankman-Fried siphoned off 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 cryptocurrency trading. at Alameda Research, the hedge fund he also owned.
The FTX founder was released last month on $250 million bond 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 United States Attorney for the Southern District of New York, who is prosecuting Mr. Bankman-Fried, declined to comment.
A spokesman for Mr. Bankman-Fried and his legal team declined to comment.
Virtually unlimited sums
Mr Bankman-Fried’s Thursday statement reiterates a narrative he has advanced before – and which US prosecutors, regulators and industry experts have dismissed outright. In it, he presents a detailed timeline of the financial situation of Alameda, which was closely tied to FTX, arguing that the company lost money due to a market crash it was not prepared for.
In his statement, Bankman-Fried also blamed FTX’s failure in part on an attack by its main 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 several years” and did not have access to all of its financial information. . Regulators and prosecutors claimed he was in fact intimately involved in running Alameda and orchestrated a scheme that allowed the company to borrow virtually unlimited sums from money deposited by FTX customers.
His statement did not address the pleas of guilt of two of his former top executives, Caroline Ellison and Gary Wang, who are both cooperating with prosecutors.
Mme Ellison, who was romantically involved with 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 platform had recovered more than $5 billion in cash and cryptocurrency assets, significantly more than the company had previously said it had on hand. .
This announcement raised hopes that FTX may be able to return some money to its millions of creditors and customers worldwide.
Andrew Dietderich, an attorney with Sullivan & Cromwell, also told the judge overseeing FTX’s bankruptcy in Delaware that the legal team had identified more than 9 million customer accounts for the platform.
Around 1.7 billion assets recovered in cash
In an email sent 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 some $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 FTX’s new management believes Robinhood shares and seized cash should be distributed to FTX’s creditors.
FTX is also looking to see if it can sell around $4.6 billion in investments the company had made in other businesses, mostly cryptocurrency companies.
In his statement on Thursday, Mr Bankman-Fried said he had previously offered “to hand over almost all [s]personal actions in Robinhood to customers” if FTX agreed to help pay his legal fees. He recently filed a petition in bankruptcy court in which he claims that these shares are his personal property and that he must sell some of them to pay his lawyers.