Bankman-Fried claims FTX US ‘fully solvent,’ denies stealing customer funds
Ryan King
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Disgraced crypto mogul Sam Bankman-Fried claimed FTX US is “fully solvent and always has been” after he was arrested on fraud charges.
While FTX US should be “able to return all customers’ funds,” FTX International remains mired by insolvency, but “no funds were stolen,” Bankman-Fried insisted in a blog post in which he vowed to dedicate nearly all of his personal assets to customers.
FTX HAS RECOVERED MORE THAN $5 BILLION IN ASSETS, BANKRUPTCY ATTORNEY SAYS
“FTX US remains fully solvent and should be able to return all customers’ funds. FTX International has many billions of dollars of assets, and I am dedicating nearly all of my personal assets to customers,” Bankman-Fried explained in the blog.
FTX, a cryptocurrency exchange, has been taken over by a bankruptcy professional as the company scrambles to recoup customer funds in the aftermath of a dramatic November meltdown. Bankman-Fried, also known as SBF, co-founded FTX in 2019, and the company gained notoriety over the summer when it bailed out faltering crypto firms amid a downturn. However, in November, the company’s fortunes soured and it declared bankruptcy.
After the collapse, revelations surfaced that FTX moved billions of dollars worth of customer money to finance risky investments in Bankman-Fried’s trading firm, Alameda Research, which also later filed for bankruptcy. This led to accusations that Bankman-Fried effectively “stole” funds from customers — an allegation he denies.
“No funds were stolen. Alameda lost money due to a market crash it was not adequately hedged for — as Three Arrows and others have this year. And FTX was impacted, as Voyager and others were earlier,” Bankman-Fried added.
Three Arrows Capitol is a cryptocurrency hedge fund that did not meet its margin calls over the summer and ultimately went bankrupt. Bankman-Fried has previously blamed the implosion for triggering a ripple effect of hardships in the crypto world.
His lengthy post featured balance sheet information and notably did not touch on the controversy over how the FTX funds wound up in Alameda, though Bankman-Fried noted that he hadn’t “run Alameda for the past few years,” and conceded that “Alameda failed to sufficiently hedge its market exposure.”
Bankman-Fried also pinned some of the blame of FTX’s woes on Binance, a rival crypto exchange firm whose collapsed deal with FTX in November spooked markets in the run-up to the company’s bankruptcy.
“In November 2022, an extreme, quick, targeted crash precipitated by the CEO of Binance made Alameda insolvent,” he wrote in the post.
Bankman-Fried is facing eight charges from the Southern District of New York and civil allegations from the Securities and Exchange Commission and the Commodity Future Trading Commission. He has pleaded not guilty to the charges, which include fraud and campaign finance counts, and was subsequently released on $250 million bail. He is now living with his parents.
The Justice Department has also been investigating other aspects of the FTX collapse scandal, such as the alleged hack that took place after it went bankrupt.
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A bankruptcy lawyer recently claimed that the company recovered some $5 billion in assets.