Per former FTX general counsel Can Sun, Sam Bankman-Fried, the former CEO of FTX, displayed complete nonchalance upon discovering the vanishing billions of dollars.
In court on October 19, during his testimony, Can Sun, the former general counsel of FTX, recounted how Sam Bankman-Fried had instructed him to concoct a legal rationale for the perplexing $8 billion shortfall in Alameda Research’s financial records. Sun, under a non-prosecution agreement with the United States Department of Justice, journeyed from Japan to offer his testimony. It was during his sworn statement that Sun unveiled his shock at learning of this billion-dollar chasm between the two entities on November 7, triggered by a spreadsheet that illuminated the staggering debt. Sun candidly admitted, “I was taken aback,” as he disclosed this revelation to the jurors.
Amid the tumultuous “liquidity crunch” of early November, when FTX sought fresh funding, Asset manager Apollo Capital was supposed to receive the same spreadsheet. When Apollo inquired about the perplexing $8 billion void, Bankman-Fried purportedly implored Sun to fashion a legal defense. As Sun testified, he pondered several legal avenues, including dormancy fees and collateral liquidation in the midst of a market downturn. Nonetheless, the colossal sums at stake left no room for negligence. Additionally, FTX’s terms of service left no room for ambiguity, stipulating unequivocally that the funds exclusively belonged to users:
“None of the Digital Assets in your account are the property of, or shall or may be loaned to, FTX Trading; FTX Trading does not represent or treat Digital Assets in user’s accounts as belonging to FTX Trading.”
According to Sun, Bankman-Fried remained unruffled by the unfolding circumstances. In contrast, former engineering director Nishad Singh appeared to be in a state of desolation, his countenance reflecting a profound sense of loss.
Later that fateful day, Sun learned from Singh about Alameda’s staggering $65 billion line of credit with FTX. Subsequently, Sun tendered his resignation, more than a year after becoming part of the exchange. Throughout his tenure at the company, Sun had relied on Bankman-Fried’s assurances that funds were meticulously segregated to facilitate the creation of legal documents for FTX and to address regulatory inquiries. He asserted, “I would never sanction anything akin to that.”
Sun’s testimony constituted a crucial segment of a hectic week in Bankman-Fried’s trial, characterized by nine witnesses offering intricate accounts of the events leading up to FTX’s collapse.
Prosecutors are expected to conclude their case on October 26 after hearing from the final two witnesses. The defense, led by Bankman-Fried, is yet to confirm whether they will present their case. Bankman-Fried faces a litany of charges, including seven counts of fraud and conspiracy to defraud FTX customers and investors. Should he be found guilty, he could potentially face a staggering 115-year prison sentence.
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