Sam Bankman-Fried faces a number of criminal and civil charges, including alleged fraud.
The trial of the disgraced founder of cryptocurrency exchange FTX and its sister company Alameda Research, a hedge fund and trading platform, is scheduled for October.
Bankman-Fried was released on bail on December 21 after being extradited from the Bahamas, where he lived and where FTX’s headquarters were located.
The former dealer pleaded not guilty on Jan. 3 during a hearing in New York.
He remained silent in court, but since then Bankman-Fried, known in the crypto space by the initials SBF, has been speaking again on social networks. As with his apology tour in late November/early December, he tries to apologize. He tries to blame others.
He just did in a blog post pointing the finger at the powerful law firm Sullivan & Cromwell. To be clear, Bankman-Fried is not accusing Sullivan & Cromwell of any wrongdoing related to FTX or Alameda Research.
Jabin Botsford/The Washington Post via Getty
“I sometimes worked in the S&C office”
He accuses Sullivan & Cromwell of conflicts of interest. He also claims the law firm forced him to file for bankruptcy and elect John Ray, FTX’s new CEO, as liquidator of FTX and Alameda Research. If his empire is in tatters, it’s basically Cromwell & Sullivan’s fault because there are other options than bankruptcy, says Bankman-Fried.
“Senators have raised concerns about a potential conflict of interest by Sullivan & Crowell (S&C),” the former crypto tycoon wrote. “Contrary to S&C’s statement that they ‘had a limited and largely transactional relationship with FTX,’ prior to the bankruptcy, S&C was one of the two principal counsels of FTX International and the principal counsel of FTX US.”
He continued, “FTX US’ GC came from S&C, they worked with FTX US on its key regulatory application, they worked with FTX International on some of its key regulatory concerns and they worked with FTX US on its key transaction. When I was visiting NYC, I would sometimes work at the S&C office.”
GC stands for General Counsel. FTX US is the American subsidiary of FTX. Consumers residing in the United States who wish to buy or sell cryptocurrencies and other digital assets (NFTs) through FTX could only do so through FTX US, a company based on American soil.
“S&C and GC were the main parties that pressured me and threatened to nominate the candidate they themselves selected as CEO of FTX – including for a solvent company in FTX US – who then filed for Chapter 11 and S&C the debtor chose his counsel,” Bankman-Fried claimed without evidence.
Sullivan & Cromwell did not respond to a request for comment.
The law firm is FTX’s primary counsel in its bankruptcy.
‘vacuum’
Four U.S. Senators – Sens. John Hickenlooper (D-Colo.), Thom Tillis (RN.C.), Elizabeth Warren (D-Mass.) and Cynthia Lummis (R-Wyo.) – recently wrote to Judge John of Delaware Dorsey to point out that given FTX’s past relationship with Sullivan & Cromwell, the law firm was not in the best position to handle the current bankruptcy proceedings.
The bipartisan group of senators wrote that the law firm “advised FTX for years before its collapse and one of its partners even served as FTX’s general counsel.”
As a result, “the firm is simply unable to uncover the information needed to ensure confidence in any investigation or finding.”
“The firm had a limited and largely transactional relationship with FTX and certain affiliates prior to the bankruptcy,” Sullivan & Cromwell replied in a statement, according to Bloomberg. A “broad team of experienced professionals, including conflict advisors,” advises FTX on insolvency.
The law firm has previously said in court documents that it recovered $8.5 million from FTX for work related to regulatory inquiries and transactions.
Dorsey found the senators’ letter “inappropriate” but said he would “base my decisions on the matters raised in the letter only on the basis of admissible evidence and the arguments of the parties and interests presented in open court.”
Bankman-Fried says there is another option than bankruptcy.
“Despite its bankruptcy, and despite processing approximately $5 billion in withdrawals over the past few days of operations, FTX International retains significant assets – approximately $8 billion in assets of varying liquidity at the time of Mr. Ray’s acquisition,” he claimed without presenting evidence.
“In addition, there have been numerous potential funding offers — including signed letters of intent following the filing of Chapter 11 — totaling over $4 billion. I believe that if FTX International had been given a few weeks, it probably could have used its illiquid assets and equity to raise enough funding to make clients essentially complete.”
Bankman-Fried is not optimistic.
“However, since S&C has pressured FTX to file the Chapter 11 filings, I am concerned that those avenues may have been abandoned.”