Sam Bankman-Fried launches a Substack newsletter to defend himself


Fallen crypto entrepreneur Sam Bankman-Fried launched a newsletter on a popular platform on Thursday that offers an elaborate defense of his actions.

“I didn’t steal funds, and I certainly didn’t siphon off billions,” Bankman-Fried said of how he ran FTX, his now-bankrupt cryptocurrency firm, which has been accused of misappropriating the money of millions of clients.

It was his biggest public defense since the Justice Department filed eight counts of fraud, money laundering and other charges against Bankman-Fried last month, and the Securities and Exchange Commission and Commodity Futures Trading Commission filed related civil complaints. Collectively, they portrayed the leader as long using customer money at FTX to finance his own risky investments, personal purchases and campaign donations.

Bankman-Fried pleaded not guilty to the Justice Department charges, brought by the U.S. attorney for the Southern District of New York. He is currently under house arrest at his parents’ home in Palo Alto, California, and is due to go on trial on those charges later this year.

Bankman-Fried did not respond to a message seeking comment, nor did his attorney, Mark Cohen. A spokesman for the Southern District of New York declined to comment.

Bankman-Fried’s comments on Thursday came via a post on a new account on Substack, the newsletter platform, that he created. The broadcast provided more details to support the views the 30-year-old former CEO made in a blitz of media interviews before his arrest in December, appearances in which he also denied knowingly doing anything unethical or illegal.

Bankman-Fried wrote on Thursday that FTX’s financial picture after the bankruptcy was less bleak than the company’s many legal and government critics have claimed.

For example, “FTX US is fully solvent and always has been,” he wrote of the company’s US division, saying that it was “ridiculous that FTX US users haven’t recovered and gotten their money back yet.”

But while lawyers for the restructured FTX said in bankruptcy court Wednesday that they had recouped about $5 billion to help repay creditors, they say the process is not straightforward.

John J. Ray, the veteran bankruptcy chief brought in to try to clean up FTX, has said it will take months to track down the swarm of accounts and subsidiaries amid a series of incomplete bookkeeping. And as much as $8 billion cannot be accounted for, according to investigators.

Bankman-Fried says he was careless at FTX. The prosecutor says it is fraud

While many customers are waiting for their money, which they have not been able to access, Bankman-Fried portrayed the losses as just a matter of ups and downs in markets and not any crime.

– No funds were stolen. Alameda lost money due to a market crash it was not adequately hedged against,” he wrote, detailing the company’s investment strategy and path to insolvency.

Although Alameda was a firm he helped found and was run by people he remained close to, Bankman-Fried sought to portray FTX as a discrete victim of Alameda’s problems, in the same way that a number of independent crypto companies have been affected by broader contagion in the market.

“FTX was affected [by the Alameda challenges] as Voyager and others were in the past,” he wrote, referring to the crypto asset manager that went under last summer due to falling values ​​at another crypto company, Terraform Labs.

But the SEC, in its complaint, called Bankman-Fried “the ultimate decision maker” at Alameda. It also claimed he made “undisclosed venture investments, lavish real estate purchases and large political donations” with customer deposits to the FTX sister firm, painting a picture of a company that was far from a helpless bystander to Alameda’s troubles.

To assist their case, prosecutors have the help of former Bankman-Fried employees Caroline Ellison and Gary Wang, both of whom have entered guilty pleas and are cooperating with authorities.

Bankman-Fried gave a number of interviews after the bankruptcy, including a lengthy session with ABC’s George Stephanopoulos. He has that too continued to tweet since he was charged a month ago by SDNY prosecutors.

The narrative has been consistent throughout: Han he says has little knowledge of, let alone control over, Alameda’s funds. And he wanted to try to help people get their money back.

Thursday’s message continued that theme. “I dedicate almost all of my personal assets to clients,” he wrote, without explaining how that would work or what it would mean.

But he also offered more financial details than he had in previous statements. Bankman-Fried focused on how Alameda became insolvent and largely chose to ignore the thrust of the allegations against him – that he illegally used FTX clients’ money to prop up the hedge fund.

Bankman-Fried wrote in the Substack post that he sought to set the record straight with testimony he was scheduled to give to the House Financial Services Committee on Dec. 13. “Unfortunately, the DOJ moved to arrest me the night before, assuming my testimony. with a completely different news cycle,” he wrote of the arrest in the Bahamas, where he was living at the time and where FTX was based.

While Bankman-Fried tried to present himself as a helpful figure on Thursday, Ray has said that the mess is of the manager’s own doing.

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of reliable financial information,” he said last month of how FTX and Alameda were run under Bankman-Fried.

Legal experts have repeatedly said the crypto boss’s press statements are a bad idea, providing fuel for prosecutors to recreate timelines and use comments against him.

It was unclear whether Substack has been launched as an ongoing newsletter or a one-off update, but Bankman-Fried concluded the post by noting that readers could expect several of his writings.

“I have much more to say,” he wrote. “But at least this is a start.”

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