FTX Founder SBF Defends Use of Clients' Funds as 'Risk Management', Trial Unfolds Ties with Bahamian Government
Summary:
FTX's founder, Sam Bankman-Fried (SBF), justifies his move to use clients' deposits as part of "risk management" for his associated crypto hedge fund, Alameda Research. During a court trial, SBF also revealed that no employees were terminated over the alleged misuse of $8 billion of client funds. The trial uncovered the exchange's close ties with the Bahamas' government before it collapsed in November. Despite SBF denying discussions with the Bahamian Prime Minister to clear the national debt, he admitted aiding the PM's son in securing work. The FTX trial is expected to end by next week.
Cryptocurrency exchange FTX's founder, Sam Bankman-Fried (SBF), has defended his actions, stating that utilizing clients' cash deposits was merely a part of the "risk management" strategy for his interconnected crypto hedge fund, Alameda Research. During a court hearing on October 31, Danielle Sassoon, a prosecutor from New York's Southern District, questioned SBF about his justification for using $8 billion of FTX customers' funds. SBF responded, saying he saw it as a risk management strategy. He further confessed that he was more focused on Alameda's portfolio than he was on FTX's operations.
SBF disclosed that none of his employees were dismissed due to the alleged misuse of $8 billion from clients for risky trading throughout his term as CEO at both FTX and Alameda. In response to Sassoon's query about this, SBF claimed he wasn't aware of any specific staff members' actions.
Further revelations during the hearing divulged the close relationship FTX had with the government of the Bahamas, where it was based. Sassoon brought up an instance where the Prime Minister of the Bahamas was given prime seats at a Miami Heat match, an allegation that SBF declined to confirm. Additionally, allegations arose during the hearing that SBF had discussions with the Bahamian Prime Minister, Philip Davis, regarding clearing his country's debt. Although SBF denied these allegations, he confessed to having assisted Davis' son in securing employment.
Just before FTX collapsed last November, the exchange assured Bahamian users that their withdrawal claims would be processed as a priority. The FTX trial is still ongoing and is predicted to conclude by next week.
Published At
10/31/2023 2:49:27 PM
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