Almost until the moment of his arrest in the Bahamas a month ago, Sam Bankman-Fried’s (SBF) post-FTX collapse media tour included days of back-to-back Twitter Spaces and Zoom calls. Now, top executives of companies in his crypto empire have pleaded guilty to criminal fraud charges of fraud and money laundering and are cooperating with the prosecution, while Bankman-Fried — free on a $250 million bond and still giving interviews — pleaded not guilty to eight similar charges and has followed up by launching a newsletter while he awaits trial.
Published this morning 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.”
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 who joined the company in 2021 after a sting with S&C.
Bankman-Fried writes, “S&C and the GC were the primary parties strong-arming 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 for dropping the value of Alameda’s net assets — by his estimation going from $99 billion at the start of 2022 to $10 billion by October.
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, considering 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.