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Sam Bankman-Fried, founder of the now-defunct cryptocurrency exchange FTX, has emerged from silence to provide a glimpse into his potential defense strategy as he prepares for his upcoming trial on October 3rd.
Earlier this week, the 31-year-old entrepreneur, who faces charges of fraud in connection with the collapse of FTX, shared a 250 page “essay” of self-justifications and reflections around events leading up to the collapse of the exchange with the intention of posting them on X (Formerly Twitter) but never did.
Notably, the documents, seen by The New York Times, revealed Mr. Bankman-Fried’s complex state of mind during his eight-month house detention. They also provided new details about his possible legal defense during the trial.
SBF Cites Caroline’s Incompetence for FTX Crash
In the said documents, Mr. Bankman-Fried criticised his former girlfriend and Alameda’s ex-CEO, Caroline Ellison, for her role in FTX’s collapse. He argued that she was ill-equipped for her position and failed to implement adequate trading strategies, which he believed could have protected their businesses from market turmoil. He also expressed frustration that Ellison avoided discussions on risk management, leading to their eventual breakup.
Mr. Bankman-Fried also criticised Sam Trabucco, co-chief executive of Alameda, and noted the discord between Trabucco and Ellison. While he acknowledged Trabucco’s aptitude for risk management, he claimed that Trabucco was quietly quitting the company by late 2021.
Notably, Ellison and two other top advisers already pleaded guilty to fraud charges and agreed to testify against Bankman-Fried last December. A fourth person also pleaded guilty recently without agreeing to cooperate. However, to date, Trabucco is yet to face any charges related to these events.
Plans to Challenge Prosecutors
The documents also revealed Mr. Bankman-Fried’s attempt to construct a narrative that challenges the accusations made against him by prosecutors. He accused Sullivan & Cromwell, the law firm overseeing FTX’s bankruptcy, of fabricating the story that he misappropriated user funds.
FTX, once considered a trustworthy platform in the crypto world, imploded last November, resulting in substantial losses for customers and widespread damage to the industry. Mr. Bankman-Fried was subsequently arrested and charged with orchestrating a scheme to divert FTX customer funds to a hedge fund he co-founded, Alameda Research, for various purposes, including venture capital investments, real estate acquisitions, and political donations.
However, despite facing potential decades in prison if convicted, Fried pleaded not guilty to the charges and was granted a $250 million bail and placed under house arrest in his parents’ home in Palo Alto, California.
The former crypto Billionaire’s bail was however revoked in August over claims of witness tampering sending him back to prison. Notably, just this week, FTX sued Bankman Fried’s parents, asking the court to claw back funds allegedly siphoned by the duo from the exchange.
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