SBF Trial, Day 12: Former FTX General Counsel Speaks Out Against SBF
Oct 20, 2023
auto_awesome
On Day 12 of the trial, the former general counsel of FTX disclosed a staggering $7 billion deficit in customer funds. He recounted pressure from Sam Bankman-Fried for legal justifications during the company's collapse. Emotions ran high as he revealed a meeting determining that FTX couldn't cover customer withdrawals, fueling suspicions of misappropriated deposits. Additionally, a Third Point executive highlighted important omissions by Bankman-Fried that could have prevented a disastrous $60 million investment, leaving listeners eager for the next chapter.
Former FTX General Counsel expressed shock at the $7 billion deficit in customer funds and revealed that Sam Bankman-Fried asked for legal justifications.
Former FTX General Counsel confirmed suspicions of misappropriated FTX customer deposits after a meeting where it was confirmed that FTX lacked sufficient funds to cover withdrawals.
Deep dives
Former FTX General Counsel testifies that Bankman-Fried asked for a legal justification for the $7 billion deficit
The former General Counsel of failed crypto exchange FTX, CANS Sun, testified at the trial of Sam Bankman-Fried that Bankman-Fried had asked for a legal justification for FTX's $7 billion deficit to cover customer withdrawals before the firm's collapse. Sun stated that it was his understanding during his time at FTX that customer assets were safeguarded and not misused. He testified that the revelation of the missing funds shocked him and prompted him to ask about the calculations behind the deficit, receiving vague or no responses.
Sun reveals discussions about changing Alameda's exemption from auto-liquidation and FTX's misuse of customer funds
Sun testified that between August and September 2022, he learned about Alameda's exemption from auto-liquidation and that Bankman-Fried and Singh wanted to maintain this immunity. Sun pushed for a delayed liquidation mechanism that would apply to all market makers to be implemented. He also discovered FTX's misuse of customer funds when he reviewed a spreadsheet detailing FTX and Alameda's finances. Sun presented three theoretical arguments to Bankman-Fried, none of which provided a satisfactory legal justification for the missing funds. Bankman-Fried did not appear surprised by this revelation.
1.
Revelations of Mismanagement in the FTX Liquidation Crisis
On the 12th day of the SBF Trial, former FTX General Counsel Can Sun testified about a $7 billion deficit in customer funds. Sun, who was responsible for crafting FTX's terms of service, expressed shock at the deficit and revealed that Sam Bankman-Fried had asked him for legal justifications. Sun also mentioned that Nishad Singh, a key witness and former head of engineering at FTX, looked emotionally drained days before the company's collapse.
Sun's testimony took a dramatic turn during a meeting with Bankman-Fried and others, where it was confirmed that FTX lacked sufficient funds to cover customer withdrawals. This meeting solidified Sun's suspicions that Alameda Research had misappropriated FTX customer deposits.
The day concluded with Robert Boroujerdi of Third Point stating that Bankman-Fried had omitted significant details that would have altered the firm’s decision to invest $60 million in the now failed crypto exchange. That investment is now worth zero. The trial will resume in a week, adding more suspense to this unfolding legal drama.