Former FTX CEO Sam Bankman-Fried is facing serious allegations regarding the missing $7 billion in customer funds. As details continue to emerge during the trial, it has been revealed that Bankman-Fried asked FTX’s former top lawyer, Can Sun, to provide legal justifications for the missing funds just days before the company declared bankruptcy.
In an attempt to cover customer withdrawals, FTX sought emergency capital from investment fund Apollo. However, when Apollo requested FTX’s financial statements, it was discovered that the exchange was billions of dollars short and owed billions to Bankman-Fried’s hedge fund, Alameda Research. This raised suspicions that the missing funds had been misappropriated by Alameda.
Sun testified that Bankman-Fried specifically asked him to come up with legal justifications for the missing funds, further confirming his suspicion that FTX did not have the money and that it had been diverted to Alameda. However, Sun later informed Bankman-Fried that he could not find any legal justifications, leading to FTX declaring bankruptcy on November 11, 2022.
Bankman-Fried now faces multiple counts of fraud and conspiracy, as he is accused of looting billions of dollars in FTX customer funds for personal investments, political donations, and to support Alameda. Despite the charges, Bankman-Fried has pleaded not guilty.
Prosecutors allege that FTX funds were funneled to Alameda, which then lent money to Bankman-Fried and other executives for various purposes, such as investments, real estate purchases, and funding political campaigns. Bankman-Fried’s defense, claiming that Alameda’s use of customer funds was appropriate, could be challenged by Sun’s testimony.
The trial is set to resume on October 26, with the prosecution expected to rest its case. The outcome of this trial will have significant implications for both FTX and Bankman-Fried, as the missing funds have caused substantial financial turmoil. As the world eagerly awaits the conclusion of the trial, more revelations are expected to shed light on the alleged misappropriation of customer funds and the subsequent bankruptcy of FTX.
– Reporting by Luc Cohen; Editing by Will Dunham
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