Sam Bankman-Fried Asks FTX Lawyer to ‘Get Out’ Over $8B Hole in Legal Dispute
Former FTX CEO Sam Bankman-Fried ordered former general counsel Can Sun to “remove” any legal explanation for the $8 billion hole in Alameda Research's books, according to Sun's Oct. 19 court testimony.
Sun flew from Japan to testify in the ongoing trial as part of an immunity deal with the United States Department of Justice. During his testimony, Sun stated that he learned about the billion-dollar gap between the two companies on November 7 after receiving the spreadsheet that indicated the debt. “I was shocked,” he told the jury.
Asset manager Apollo Capital was slated to receive the spreadsheet as FTX tried to raise fresh funding during a “liquidity crunch” in early November. In response to Apollo's query about the $8 billion request, Bankuman Fried reportedly asked Sun to “bring legal proof”.
As Sun admitted in his testimony, he considered some legal options. Among them were sleeping charges and collateral liquidations during the market downturn, but the missing amounts were too large to ignore. Also, FTX's terms of service were clear that funds are for users only:
“None of the Digital Assets in your Account are owned by or may be borrowed from FTX Trading. FTX Trading does not represent or regard the Digital Assets of User Accounts as the property of FTX Trading.”
Banman-Fried was “not at all surprised” by the circumstances, the Sun said, while former engineering director Nishad Singh said he was “as gray as if his soul had been taken from him”.
That same day, Sun learned from Singh about Alameda's $65 billion credit line with FTX. A year after joining the exchange, he resigned the day after.
During his time at the company, Sun relied on Bankman-Fried's confirmation that funds were distributed to FTX to produce legal documents and answer questions from regulators, he told jurors. “I will never allow such a thing.”
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What's next in the Sam Bankman-Fried trial?
Sun's testimony was part of a busy week at the Bankman-Fried trial, in which nine witnesses detailed the months leading up to FTX's collapse.
Prosecutors are expected to close their case on October 26 following the testimony of two final witnesses. Bankuman-Fried's defense, however, has yet to prove that it will bring the case.
Bankman-Fried was charged with seven counts of defrauding and defrauding FTX customers and investors. If convicted, he faces up to 115 years in prison.
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