FTX’s $8bn balance-sheet hole took Sam Bankman-Fried by surprise, he reveals

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Sam Bankman-Fried’s Shocking Testimony

In a stunning revelation, Sam Bankman-Fried, the former CEO of Alameda Research and FTX crypto exchange, expressed his surprise at learning about the $8 billion debt owed to FTX by his trading firm. Bankman-Fried disclosed these details during his testimony in court, shedding light on the dramatic collapse of the companies.

The Financial State of Bankman-Fried’s Companies

Bankman-Fried admitted that he made mistakes but claimed that his closest employees and friends kept him unaware of the true extent of the financial hole until shortly before the collapse. He revealed that he only had a partial understanding of the financial situation and was unaware of the $8 billion liability until October 2022. This lack of knowledge became a critical defense strategy for Bankman-Fried.

Testimony from Bankman-Fried and His Associates

During his testimony, Bankman-Fried spoke about the founding of FTX and Alameda Research, highlighting his collaborations with college friends and former colleagues. Witnesses, including Gary Wang, Nishad Singh, and Caroline Ellison, cooperated with the prosecution and testified about conversations they had with Bankman-Fried regarding the $8 billion liability created by Alameda’s handling of FTX customer deposits. However, Bankman-Fried contradicted their accounts, claiming that he only became aware of the true extent of the gap in October 2022.

Bankman-Fried’s Defense Strategy

Bankman-Fried’s defense revolved around his lack of knowledge about his companies’ finances, asserting that he was not fully aware of the situation until weeks before their collapse. He also highlighted the overwhelming workload and constant flow of information he faced as the CEO of a fast-growing exchange, emphasizing the challenges he encountered in managing the business.

Blaming Ellison and Revealing Secrets

Bankman-Fried placed blame on Caroline Ellison, claiming that she failed to hedge the trading firm’s debt-fueled bets on rising crypto prices, resulting in significant losses. He also revealed that Ellison had suggested sending Alameda’s lenders a balance sheet that concealed the massive debts to FTX. He admitted to only briefly discussing the document with her.

Personal Relationships and Testimony Preview

Bankman-Fried briefly touched upon his relationship with Ellison, stating that it ended because he was unable to fulfill her expectations. He admitted that relationships were not his strong suit. Additionally, he provided a preview of his testimony, answering questions to determine their admissibility as evidence in the defense’s case.

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Read More of this Story at www.ft.com – 2023-10-27 22:11:44

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