FTX Founder Denies Embezzling Trillions, Rejects Fraud Charges

[Asia Economy New York=Special Correspondent Seulgina Jo] Sam Bankman-Fried, the founder of FTX, one of the world's top three cryptocurrency exchanges that filed for bankruptcy protection, has once again denied the fraud charges brought against him.

On the 12th (local time), according to Bloomberg and other sources, Bankman-Fried posted on his blog, "I did not steal funds nor embezzle tens of billions of dollars (trillions of won)." He stated, "Unfortunately, I failed to respond quickly to public misunderstandings and false news," attributing the cause of the FTX incident not to fraud but to managerial negligence. He also drew a line regarding Alameda Research, the epicenter of FTX's collapse, saying he had not managed it for years.

[Image source=AP Yonhap News]

Earlier, the U.S. Attorney's Office for the Southern District of New York indicted Bankman-Fried on eight charges including criminal fraud, internet banking fraud, money laundering, and illegal campaign contributions. It is understood that Bankman-Fried raised tens of billions of dollars from FTX investors, diverted them to his affiliate Alameda Research, and then used the funds for undisclosed venture investments, luxury real estate purchases, and large political donations. If all charges are proven in court, he could face up to 115 years in prison.

Bankman-Fried appeared to shift the blame for FTX's collapse onto Binance, the world's largest cryptocurrency exchange and a competitor. In his blog post, he claimed that Binance CEO Zhao Changpeng worked for a month to bring down FTX, and that Zhao’s tweets became a fatal blow to the FTX crisis. This refers to the tweet Zhao posted last November, when FTX was facing a liquidity crisis, stating he would acquire FTX but then canceled the deal and announced plans to sell FTX’s self-issued coin, the FTT token.

Previously, Binance had agreed to acquire some of FTX’s business units amid the liquidity crisis last November but withdrew the offer after just one day. Furthermore, when suspicions about FTX’s financial instability arose, Binance immediately declared the disposal of FTT tokens issued by FTX, triggering a bank run (a situation where customers withdraw funds en masse).

Since being extradited to the U.S. on the 21st of last month, Bankman-Fried was released on $250 million bail and placed under house arrest at his parents’ home in Palo Alto, California. He also pleaded not guilty during the arraignment hearing held on the 3rd at the U.S. District Court for the Southern District of New York.