Sam Bankman-Fried, the disgraced cryptocurrency executive, on Thursday made his first detailed response to the criminal charges filed against him last month, arguing that the millions of customers of his collapsed exchange, FTX, could still get their money back.
In a statement published on Substack, Mr. Bankman-Fried said that “very substantial recovery remains potentially available.”
“I didn’t steal funds, and I certainly didn’t stash billions away,” he wrote. “Nearly all of my assets were and still are utilizable to backstop FTX customers.”
His statement came a day after the lawyers overseeing FTX’s bankruptcy said in court that they had recovered at least $5 billion in funds. Mr. Bankman-Fried cited that announcement to try to bolster his case that FTX customers could still be made “substantially whole.” It was not clear whether he had vetted his statement with his legal team before publishing 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 then arrested last month at his home in the Bahamas, where FTX was based, and swiftly extradited to the United States. Federal prosecutors in Manhattan have charged him with fraud, money laundering and campaign finance violations.
What to Know About the Collapse of FTX
What is FTX? FTX is a now bankrupt company that was one of the world’s largest cryptocurrency exchanges. It enabled customers to trade digital currencies for other digital currencies or traditional money; it also had a native cryptocurrency known as FTT. The company, based in the Bahamas, built its business on risky trading options that are not legal in the United States.
The authorities claim that Mr. Bankman-Fried siphoned billions of dollars in customer deposits from FTX and used the funds to purchase 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 a $250 million bond under strict conditions that require him to remain confined to his parents’ home in Palo Alto, Calif. In a brief court appearance in New York last week, he pleaded not guilty to the criminal charges.
Mr. Bankman-Fried’s statement on Thursday reiterates a narrative he has advanced before — and that U.S. prosecutors, regulators and industry experts have roundly rejected. The post laid out a detailed timeline of the financial situation at Alameda, which was closely tied to FTX, arguing that the firm lost money as a result of a market crash that it was unprepared for.
Mr. Bankman-Fried’s statement also blamed FTX’s failure partly on an attack by its largest rival, Binance.
“No funds were stolen,” he wrote.
But even as he outlined Alameda’s finances, Mr. Bankman-Fried also asserted that he hadn’t run the firm “for the past few years” and didn’t have access to all its financial information. Regulators and prosecutors have argued that he was in fact intimately involved in Alameda’s management and orchestrated a system that allowed the company to borrow essentially an unlimited amount of money from FTX’s pool of customer deposits.
His statement did not address the guilty pleas from two of his former top executives, Caroline Ellison and Gary Wang, both of whom are cooperating with prosecutors. Ms. Ellison, who once dated Mr. Bankman-Fried, was the head of Alameda when the firm collapsed, and Mr. Wang founded FTX with Mr. Bankman-Fried.
On Wednesday, a bankruptcy lawyer for FTX told a federal judge that the exchange had recovered more than $5 billion of cash and crypto assets — considerably more than the company had previously said it had on hand. The announcement raised hopes that FTX might be able to return some money to its millions of creditors and customers around the world.
Andrew Dietderich, an attorney with the law firm Sullivan & Cromwell, also told the judge overseeing FTX’s bankruptcy in Delaware that the legal team had identified more than 9 million customer accounts at the crypto exchange.
The Aftermath of FTX’s Downfall
The sudden collapse of the crypto exchange has left the industry stunned.
In an email after the bankruptcy hearing, Mr. Dietderich said that of the $5 billion in newly recovered assets, approximately $1.7 billion was in cash.
He said the newly recovered assets did not include roughly $20 million in cash and $484 million in shares in the online trading company Robinhood that federal prosecutors had seized from a separate company that Mr. Bankman-Fried set up in Antigua. He also said FTX’s new management believes the Robinhood shares and the seized cash ultimately should be distributed to FTX creditors.
In his statement on Thursday, Mr. Bankman-Fried said he had previously offered “to contribute nearly all of my personal shares in Robinhood to customers” if FTX agreed to help him pay his legal bills. He recently filed a motion in bankruptcy court arguing that those shares are his personal property and that he needs to sell some of them to pay his lawyers.
After FTX collapsed, Mr. Bankman-Fried gave a series of interviews about the implosion. But since he was released on bail last month, he has been relatively quiet, save for a few tweets, until now. He has entertained a handful of visitors at his parents’ home, including the author Michael Lewis, who is writing a book about him; the crypto YouTube personality Tiffany Fong; and a reporter for the online publication Puck.
In his post, Mr. Bankman-Fried said he had hoped to respond in detail to the allegations against him much earlier, starting with testimony he had planned to deliver to the House Financial Services Committee on Dec. 13.
“Unfortunately, the DOJ moved to arrest me the night before, pre-empting my testimony with an entirely different news cycle,” he wrote, referring to the Department of Justice.