At the time of bankruptcy, FTX faced a shortfall of $8 billion owing to its customers.
Sam Bankman-Fried (SBF), the founder of cryptocurrency exchange FTX, claims that spending clients’ fiat deposits was just part of “risk management” for his intertwined crypto hedge fund Alameda Research.
During the former crypto executive’s court testimony on October 31, prosecutor Danielle Sassoon of the Southern District of New York asked SBF if he believed that it was permissible to spend $8 billion of FTX customers’ fiat money. “I thought it was folded into risk management,” he said. “As CEO of Alameda, I was concerned with their portfolio. At FTX, I was paying attention but not as much as I should have been.”
As told by SBF, during his tenure as both CEO of FTX and Alameda, no individuals were fired for allegedly siphoning $8 billion worth of clients’ money for speculative trading. “I don’t remember knowing anything about particular employees,” replied SBF to a question by Sassoon.
Bankman-Fried also disclosed during the proceedings that the now-defunct exchange, which was headquartered in the Bahamas, had close ties with the island country’s government. “You gave the Bahamas Prime Minister floor side seats at the Miami Heat Arena,” asked Sassoon. “I don’t remember that,” replied SBF. “Here’s a message where you say he is in FTX’s courtside seats with his wife,” said Sassoon.
Allegedly, SBF talked with the Bahamian prime minister, Philip Davis, about paying off his nation’s debt. Although the crypto executive denies it, he admits to helping Davis’ son secure a job.
Just before the exchange collapsed last November, FTX announced that Bahamian users would be made whole and that it would process their withdrawal requests in priority. The FTX trial remains ongoing and is expected to wrap up before the end of next week.