Sam Bankman-Fried Denies Stealing FTX Funds in New Online Post

The former FTX CEO blamed the exchange's collapse on the crypto market meltdown, Alameda’s poor hedging and a "targeted attack" by Binance.

AccessTimeIconJan 12, 2023 at 2:18 p.m. UTC
Updated May 9, 2023 at 4:05 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Sam Bankman-Fried, the disgraced former chief of FTX, denied stashing away billions of dollars and gave his take on what happened to his bankrupt crypto exchange in a lengthy new post on Substack published Thursday.

He denied stealing funds and claimed FTX and sister company Alameda Research collapsed because of 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.”

While alleging the trading firm "failed to sufficiently hedge its market exposure," he also said he "hasn't run Alameda for the last few years."

Bankman-Fried faces numerous federal charges including conspiracy to commit fraud and is now free on bail at his parents’ home in California. He has pleaded not guilty to the charges, but his lieutenant and Alameda chief Caroline Ellison pleaded guilty to 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 didn't 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 in his note, Bankman-Fried called an announcement by crypto exchange Binance to withdraw funds from Alameda in early November that set off a run on the FTX exchange 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 Markets (HOOD) shares to customers.

Meanwhile, court filings show Bankman-Fried seeking to retain control of the roughly 56 million Robinhood shares (worth around $450 million) to pay his legal fees. The disputed shares have since been seized by the Justice Department.

Update (Jan. 12, 2023 14:54 UTC): Updates with additional detail throughout.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Nelson Wang

Nelson Wang was CoinDesk's news editor for the East Coast. He holds BTC and ETH above CoinDesk's disclosure threshold of $1,000.

Sandali Handagama

Sandali Handagama is CoinDesk's deputy managing editor for policy and regulations, EMEA. She does not own any crypto.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.