- SBF said he was surprised over the $8 billion customer deposit shortfall at the crypto exchange.
- Testifying in his fraud trial, he admitted to mistakes but shifted blame to employees.
Sam Bankman-Fried (SBF), the former billionaire and founder of FTX, recently testified that he was “very surprised” when he discovered the $8 billion customer deposit deficit that plagued his private trading firm, Alameda Research, and ultimately led to the bankruptcy of his cryptocurrency exchange.
According to a report by the Financial Times, SBF testified on Friday, highlighting the collapse of FTX. He admitted to making “mistakes” but maintained that he had been kept in the dark about the true extent of the financial shortfall by his closest employees and friends.
This revelation contradicted the accounts of some of his associates who had cooperated with the prosecution, claiming they had discussed the $8 billion liability created when Alameda Research received FTX customer deposits into its bank accounts.
Alameda’s Role in FTX’s Collapse
Bankman-Fried asserted that he only learned the actual magnitude of the deficit in October 2022 when he gained access to a new version of the company’s database. Until then, he believed Alameda’s debts to FTX were around $2 billion.
Furthermore, he claimed that he believed Alameda could use borrowed money from FTX for various purposes as long as the risks were adequately managed.
Bankman-Fried also testified about secret privileges Alameda Research had enjoyed on FTX, created by other individuals without his knowledge. He attributed some blame for Alameda’s collapse to Caroline Ellison, claiming that he had urged her to hedge the trading firm’s debt-fueled bets on rising crypto prices, a suggestion she did not act upon, resulting in significant losses.
In a separate report, SBF disclosed that he started investing in Solana’s SOL tokens at the remarkably low price of 20 cents per token, Coindesk reported. When questioned about the source of funds for these investments, he attributed them to Alameda’s operating profits and funds borrowed from third-party lenders.
