In the ongoing trial of Sam Bankman-Fried, the founder of cryptocurrency exchange FTX, shocking revelations have emerged. Can Sun, FTX’s former general counsel, testified that Bankman-Fried had asked him to craft “legal justifications” to explain the disappearance of billions of dollars in customer funds as the exchange struggled with processing customer withdrawals in November.
Former FTX counsel gives details of inside events
During this tumultuous time, Bankman-Fried explored the possibility of raising money from investment fund Apollo to keep the exchange afloat and address the concerns of customers eager to exit the platform. However, Apollo required an explanation for the apparent $7 billion shortfall within the once-popular exchange. Sun informed Bankman-Fried during a conversation at the company’s headquarters, located at The Albany, a luxury resort in the Bahamas, that there were no legal justifications supported by the facts. Despite Bankman-Fried proposing various explanations, none of them stood up to scrutiny.
Bankman-Fried, during the conversation, didn’t appear surprised and responded with a sense of resignation. Sun’s account of this interaction highlighted a marked contrast with the demeanor of other employees present at the resort, particularly Nishad Singh, FTX’s former head of engineering and an alleged co-conspirator in the case. According to Sun, Singh appeared distressed, with a visible change in his disposition. Later that evening, Singh detailed to Sun how customer funds could be accessed through Bankman-Fried’s trading firm, Alameda Research. It was after this revelation that Sun resigned from his position.
Shocking revelations trail the ongoing SBF lawsuit
Notably, Sun expressed shock over the revelation that Alameda’s trading positions couldn’t be liquidated on the platform, which was critical to Alameda’s alleged ability to access customer accounts. He had previously pushed for a “delayed liquidation” process to apply to Alameda’s positions, but this effort faced obstacles on the business side of FTX. During his tenure as FTX’s general counsel, Sun disclosed his involvement in structuring personal loans for FTX insiders, amounting to approximately 30 to 40 transactions totaling $2 billion. Sun himself received a $2.3 million loan from Alameda, which he used to purchase a home in the Bahamas and relocate to the country.
Additionally, Sun received $3.5 million in bonus pay during his time at FTX. Sun also expressed his belief that FTX maintained a clear segregation of customer funds from company cash. He thought that customers would be able to make withdrawals if the exchange ever faced solvency issues, emphasizing that protecting customer funds was a fundamental value at FTX. These revelations underscore the complex and concerning nature of the situation surrounding the missing customer funds at FTX. The trial of Sam Bankman-Fried continues, shedding light on the intricate web of events and decisions that led to this financial crisis.