Sam Bankman-Fried Reveals Key Actor Behind FTX Bankruptcy

FTX founder Sam Bankman Fried. (Photo; Doc. Beamstart)

JAKARTA - The founder of the bankrupt cryptocurrency exchange FTX, Sam Bankman-Fried (SBF), has come out of silence to provide a brief overview of his defense strategy ahead of the trial which will take place on October 3.

Earlier this week, a 31-year-old crypto entrepreneur facing allegations of fraud related to FTX's fall, shared his 250-page personal essay containing his self-defense and reflection of events that triggered FTX's collapse. Reportedly, part of the essay will be uploaded on platform X but until now the plan has never been carried out.

According to a report by The New York Times, the essays revealed the complexity of Bankman-Fried's eight-month mental condition during his prison term. In addition, the documents also provide new views on the possibility of a legal defense strategy that will be taken by him during the trial.

Caroline Ellison, CEO of Alameda Research

Based on the essay notes, Bankman-Fried mentioned the name of his ex-girlfriend, Caroline Ellison, who was previously CEO of Alameda Research, a partner company FTX. Ellison is said to have played an important role in the collapse of the FTX crypto exchange in November last year.

Sam Bankman-Fried assessed Ellison was not ready to hold his position and failed to implement the expected trade strategy. Bankman-Fried believes this strategy will protect their business from market turmoil. Furthermore, the document also noted Bankman-Fried's disappointment because Ellison often avoided discussions about risk management, which eventually led them to separate.

Although Sam Bankman-Fried's views on his ex-lover have just been revealed, it should be noted that Ellison and two other top advisers have pleaded guilty to charges of fraud and agreed to testify against Bankman-Fried in December last year. However, until now, Ellison and his advisers involved in this case have not faced any charges.

Sullivan & Cromwell Law Firm

The documents revealed also illustrate the efforts made by Sam Bankman-Fried to build a narrative that opposes allegations from prosecutors. SBF actually accused law firm Sullivan & Cromwell, who oversees the bankruptcy of FTX, of having fabricated a story that he had abused user funds.

FTX, once considered a trusted crypto platform, filed for bankruptcy in November 2022. FTX's fall caused huge losses to platform users as well as widely damaged the image of the crypto industry.

Bankman-Fried was later arrested and charged with setting up a fraudulent scheme to transfer FTX customer funds to the hedge fund company he founded, namely Alameda Research. The transfer of user funds is aimed at a number of plans, including venture capital investments, real estate acquisitions, and political donations.

Despite being faced with a potential sentence of decades in prison if found guilty, Bankman-Fried defended himself by stating that he was innocent of the allegations. The FTX founder provided a guarantee of 250 million (Rp3.8 trillion) until he was finally placed under house arrest at his parents' residence in Palo Alto, California.

Not long after, the guarantee from the former crypto billionaire was lifted in August due to claims of witness disruption, which eventually forced Bankman-Fried to return to prison. Currently, FTX is led by new CEO John Ray III. Not long ago the company sued Bankman Fried's parents, Joseph Bankman and asked the court to return the funds allegedly taken from the exchange.