Sam Bankman-Fried Denies Misuse of FTX Funds

FTX Collapse and Bankman-Fried's Stance

Sam Bankman-Fried, founder of FTX, has publicly denied knowledge of any misuse of customer deposits at the cryptocurrency exchange. This statement comes amid scrutiny over the collapse of FTX and its bankruptcy filing on November 11. Bankman-Fried stepped down as CEO following a massive withdrawal of $6 billion by traders, further exacerbated by Binance's decision to abandon a rescue deal.

Allegations of Fund Mismanagement

Reports indicate that Bankman-Fried secretly redirected $10 billion of FTX customer funds to its affiliated trading firm, Alameda Research. Despite these allegations, he maintains that he was unaware of any improper fund transfers to Alameda. Bankman-Fried attributes the financial turmoil to mislabeled internal accounts, which inaccurately reflected Alameda's financial position as significantly smaller than it was.

Alameda Research's Financial Exposure

Bankman-Fried revealed that Alameda had amassed a large position on FTX, which became unsustainable as digital asset prices fell. This over-leveraging led to severe financial strain. He stepped down as CEO of Alameda in October 2021, passing leadership to Caroline Ellison and Sam Trabucco, suggesting that the issues arose after his departure.

Bankruptcy and Miscommunication

During a live discussion, Bankman-Fried claimed pressure to include FTX's U.S. subsidiary in bankruptcy filings, despite his belief in its solvency. He suggested misinformation from individuals no longer trusted, though he refrained from providing further details.

Bankman-Fried continues to deny any criminal liability for the collapse, maintaining he never intended to commit fraud. This unfolding situation remains under close watch by the cryptocurrency community and regulators alike.