In a strange turn of events, Sam Bankman-Fried (SBF) is making headlines again from the comfort of his parent’s house under house arrest—this time declaring that all of his customers will be paid back. Yes, you read that correctly. SBF this week released a newsletter in which he covered what went wrong, how he’s absolved of blame, and how he still can’t quite grasp the magnitude of the situation.
Published this week on Substack, the “FTX Pre-mortem Overview” message from the former CEO says, among other things, that “I didn’t steal funds, and I certainly didn’t stash billions away.”
SBF Blames Legal Team for FTX’s Demise
In the lengthy post (and some follow-up tweets), he tries to lay out a case that FTX and Alameda Research “were both legitimately and independently profitable businesses in 2021, each making billions.” Given a few more weeks, he asserts, FTX International may have survived the crisis. The villains in this version of the tale include lead FTX bankruptcy counsel Sullivan & Cromwell (S&C) along with Ryne Miller, the general counsel of FTX US.
Bankman-Fried writes, “S&C and the GC were the primary parties strongarming and threatening me into naming the candidate they themselves chose as CEO of FTX, including for a solvent entity in FTX US, who then filed for Chapter 11 and chose S&C as counsel to the debtor entities.”
SBF ultimately blames the fall of his empire on a series of market crashes that initiated the so-called “crypto winter” last year. This dropped the value of Alameda’s net assets—by his estimation going from $99 billion at the start of 2022 to $10 billion by October.
Binance CEO Also Mentioned
Then came the tweet by Binance CEO Changpeng “CZ” Zhao that initiated a run of FTX’s FTT token, which he paints as a “targeted attack on assets held by Alameda, not a broad market move.” It’s an interesting position for him to take. A report by The New York Times said prosecutors are investigating the possibility that he and Alameda manipulated trading that set off the crash of TerraUSD and Luna cryptocurrencies earlier this year.
“And so, as Alameda became illiquid, FTX International did as well, because Alameda had a margin position open on FTX, and the run on the bank turned that illiquidity into insolvency,” Bankman-Fried writes.
The post does not address the guilty pleas entered by his former friends and business associates, namely fellow FTX co-founder and former CTO Zixiao “Gary” Wang and former Alameda Research CEO Caroline Ellison.
At its launch, the Substack offered followers an opportunity via a subscription of up to $150 per year for “founding” members. SBF has since turned that option off.
Overall, the newsletter largely rehashes many of the points SBF made in the brief period between FTX’s collapse and his early December arrest in the Bahamas. This was when he spoke loosely to just about every media organization that would listen. Since then, the founder had remained relatively silent. This is something legal experts say he should have stuck to from the start.
Former Prosecutor Sounds Off On SBF
“The most powerful evidence a prosecutor can have is the defendant’s own words, and Bankman-Fried is giving the government a gift,” former federal prosecutor Moira Penza told The New York Times. “If I were prosecuting the case, I would want him to keep talking, and if I were defending him, I would be telling him to shut his mouth.
What do you guys think? Should SBF take a breather from the back-to-back interviews? What about the tweets and odd newsletter that was considered to be an additional source of revenue at some point?
One thing is for certain: SBF needs a vacation and some time on his own to reflect.
