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