Sam Bankman-Fried Blames Others For FTX Debacle

Sam Bankman-Fried, the former crypto star turned alleged white-collar criminal, has spoken out for the first time since his arrest last month, publishing a lengthy blog post that appears to lay out his defense against fraud charges, Allison Morrow and Kara Scannell reported for Reuters.

Photo Insert: "SBF," as he is commonly called, places the blame squarely on Alameda, the crypto hedge fund he founded in 2017.

“I didn’t steal funds, and I certainly didn’t stash billions away,” he writes in a newly launched Substack.

Bankman-Fried is under house arrest at his parents’ home in Palo Alto, California, while awaiting trial. He pleaded not guilty to multiple federal counts of fraud and conspiracy related to the collapse of his crypto empire.

In what he calls a “premortem overview” of FTX’s collapse, Bankman-Fried reiterates claims he made in November after the crypto exchange filed for bankruptcy and before he was arrested. He places blame squarely on Alameda, the crypto hedge fund he founded in 2017.

“Alameda failed to sufficiently hedge against the risk of an extreme market crash: the hundred billion of assets had only a few billion dollars of hedges,” he says.

Alameda’s contagion then spread to FTX “because Alameda had a margin position open on FTX; and the run on the bank turned that illiquidity into insolvency.”

He wasn’t in charge at Alameda. Bankman-Fried reiterates that he was not in charge of Alameda in the “past few years,” having appointed his onetime girlfriend, Caroline Ellison, as the sole CEO in 2022.

Alameda’s and FTX’s problems weren’t unique, Bankman-Fried writes. He frequently contextualizes the firms’ decline as part of an industry-wide downturn that ensnared several other firms, including Three Arrows Capital, Voyager, and Celsius — all of which were bankrupted in the so-called crypto winter, a broad decline in the value of digital assets, similar to a bear market.

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