Here Is How FTX’s Sam Bankman-Fried (SBF) Is Trying to Wriggle His Way Out of a Possible Conviction in the US

Rohail Saleem
Sam Bankman-Fried SBF FTX
Image Source: VICE

This is not investment advice. The author has no position in any of the stocks mentioned. has a disclosure and ethics policy.

Any lawyer who is even remotely competent would customarily urge clients to forego public discourse in the run-up to a trial in order to avoid prejudicing the jury or inevitably revealing any damaging information. Sam Bankman-Fried (SBF), the ex-CEO of the now-defunct FTX crypto exchange, has thrown this rulebook out of the proverbial window by continuing to publicly plead his case via a dedicated substack. Yet, there appears to be a method to this madness. After all, both of SBF’s parents are professors of the law.

A few hours back, Sam Bankman-Fried published another blog on his personal substack page. While the first blog, published last week, was more of a rant, SBF’s latest attempt appears to be laser-focused on the slipups of Sullivan & Cromwell (S&C), the law firm hired by FTX’s current management to lead the case against its former CEO.

While we encourage our readers to go through the entire blog, in essence, Sam Bankman-Fried has very shrewdly picked up on the supposed inconsistencies that are found in S&C’s submissions to the bankruptcy court. While S&C revealed yesterday that around $5.5 billion in liquid FTX assets have been identified to date, the law firm confirmed net shortfalls at both FTX US and its international subsidiaries under the ambit of Specifically, S&C declared:

“FTX Debtors have identified only $181 million of digital assets associated with FTX US as of the Petition Time.”

However, there is an apparent discrepancy here. S&C has not factored in the $428 million that are held in the bank account of FTX US. Sam Bankman-Fried pounced on this apparent discrepancy to postulate that FTX US currently has total assets worth $609 million ($181 million + $428 million). SBF then compares this amount with estimates of customer balances to declare that “FTX US had at least $111m, and likely around $400m, of excess cash on top of what was required to match customer balances.”

FTX US Balance Calculation by Sam Bankman-Fried

For additional clarity, we have reproduced the calculations by Sam Bankman-Fried in the snippet above. As is evident, SBF estimates customer balances at a little over $497 million as of the 10th of November 2022. On the other hand, S&C estimates customer balances of around $199 million as of the 11th of November – one day after a high-profile hack that drained a lot of FTX assets.

The Overarching Strategy of Sam Bankman-Fried

This brings us to the crux of the matter. Sam Bankman-Fried is apparently hard at work to obfuscate the real issue here: the existence of an undisclosed symbiotic relationship between Alameda Research and FTX. While describing what had gone wrong at FTX in his first blog, SBF identified Alameda’s failure to adequately hedge its market exposure as a key contributing factor to FTX’s bankruptcy. However, the fact remains that FTX would not have had any problem if its client funds had not been leveraged out to Alameda. SBF conveniently ignores this assertion in his substack posts.

Sam Bankman-Fried is doing exactly what any good defendant’s lawyer would do: go after the lacunae in the legal case. By hammering home the supposed discrepancy in S&C’s statements, SBF is trying to strengthen his own case, contending that FTX US clients – a key group of stakeholders for the jury – remain financially whole.

Meanwhile, as per a tabulation by UnusualWhales, one in every three Congresspeople, consisting of US Senators and House Representatives, received political funding from FTX. Crucially, only 19 out of those 196 Congresspeople have so far provided firm commitments to return these funds. While not legally required to do so, all such Congresspeople should seriously consider returning this tainted funding to prevent the perception of a systemic rot.

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