FTX founder Sam Bankman-Fried defends crypto giant’s collapse in Substack post

Sam Bankman-Fried has published a 2,000-word blog post defending and explaining the collapse of his crypto exchange FTX, which he attributes to his sister company Alameda Research.

In a Substack post Thursday morning titled “FTX Pre-Mortem Overview,” Bankman-Fried claims he was “heavily armed” to appoint a new CEO who has filed for bankruptcy and that with more time he would have cashed out clients be able.

“I believe that if FTX International had been given a few weeks, it probably could have used its illiquid assets and equity to raise enough funding to essentially make clients complete,” he wrote.

He also suggested he might be able to save the collapsed company as early as now, saying “if FTX International were restarted there was a real possibility that customers would be essentially restored.”

Bankman-Fried secretly transferred $10 billion in client funds from FTX to trading firm Alameda Research. Much of that money has disappeared, and he estimates he lost investors between $1 billion and $2 billion.

Sam Bankman-Fried a published a 2,000-word blog post defending and explaining the collapse of his crypto exchange FTX

“I have not stolen any funds, and I certainly have not hidden billions,” Bankman-Fried wrote in Thursday morning’s Post. He also shared approximations of old FTX balance sheets that suggest FTX’s financial condition was not as bad as its Chapter 11 filing suggests.

‘Almost all of my assets were and still are usable to hedge FTX clients. For example, I’ve offered to donate nearly all of my personal shares of Robinhood to clients.

He said that despite paying out $5 billion to customers in the final days before bankruptcy, $8 billion of “varying liquidity” was still available.

He claimed that only approximate numbers and balance sheets were provided because his personal passwords were managed by the Chapter 11 team, which now manages the bankrupt company.

Nonetheless, he concedes that FTX’s illiquidity and inability to pay out clients is related to a turbulent crypto market that Alameda suffered in 2022.

“Alameda lost approximately 80 percent of its wealth over the course of 2022 due to a series of market crashes,” Bankman-Fried wrote. ‘FTX was affected by Alameda’s decline.’

Alameda Research, which he described as having a “contagion” that “spread to FTX,” was once run by Bankman-Fried’s ex-girlfriend Caroline Ellison (pictured).

Alameda Research, which he described as having a “contagion” that “spread to FTX,” was once run by Bankman-Fried’s ex-girlfriend, Caroline Ellison.

Ellison told a New York court last month that as the company’s CEO, she had access to an “unlimited” amount of FTX client funds.

In the post, he addressed the extent to which FTX was dependent on Alameda for liquidity, but implied that the dependency had dropped tremendously in recent years, while simultaneously claiming that his own implosion was responsible for FTX’s collapse be responsible.

In 2021, Alameda performed strongly, he said, but “failed to adequately hedge against the risk of an extreme market crash.”

Alameda’s assets — a combination of altcoins, crypto companies, public stocks, and venture investing — fell around 80% over the year, increasing leverage bit by bit,” he said.

Bankman-Fried said Sullivan & Cromwell worked with FTX’s general counsel to force him to appoint bankruptcy CEO John Ray (pictured).

Bankman-Fried targeted the law firm Sullivan & Cromwell, which he says worked with FTX’s general counsel to force him to appoint bankruptcy CEO John Ray to take over.

“S&C and GC were the main parties that pressured me and threatened to nominate the candidate they themselves selected as CEO of FTX – including for a solvent company in FTX US – who then filed for Chapter 11 and S&C chose the debtor units as counsel,” he wrote.