{"id":179169,"date":"2023-10-23T07:30:34","date_gmt":"2023-10-23T02:00:34","guid":{"rendered":"https:\/\/dripp.zone\/news\/?p=179169"},"modified":"2023-10-23T07:30:34","modified_gmt":"2023-10-23T02:00:34","slug":"sbf-asked-former-ftx-lawyer-to-find-legal-justifications-for-missing-customer-funds-crypto-news","status":"publish","type":"post","link":"https:\/\/dripp.zone\/news\/sbf-asked-former-ftx-lawyer-to-find-legal-justifications-for-missing-customer-funds-crypto-news\/","title":{"rendered":"SBF Asked Former FTX Lawyer to Find ‘Legal Justifications’ for Missing Customer Funds – Crypto News"},"content":{"rendered":"
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FTX former general counsel, Can Sun, testified on Thursday that Sam Bankman-Fried asked him to craft \u201clegal justifications\u201d to explain why billions of dollars of customer funds were missing, as the exchange struggled to process customer withdrawals last November.<\/p>\n

As FTX melted down<\/a>, Bankman-Fried thought the exchange could raise money from investment fund Apollo to stay afloat and satisfy customers rushing for the exit. The catch: Apollo wanted to know how a $7 billion shortfall could exist at the once popular exchange.<\/p>\n

There were no legal justifications that were supported by the facts, Sun said he told Bankman-Fried as they strolled through The Albany\u2014a luxury resort in the Bahamas that housed FTX\u2019s headquarters\u2014during a one-to-one chat.<\/p>\n

\u201cYup, yup,\u201d Sun recalled Bankman-Fried saying as he acknowledged several possible explanations that didn\u2019t hold up. \u201cGot it.\u201d<\/p>\n

It wouldn\u2019t be viable to say that billions of funds were taken from dormant customer accounts, Sun explained. And the exchange\u2019s terms of service, which Sun helped update earlier that year, explicitly stated the exchange couldn\u2019t touch customer assets.<\/p>\n

Sun joined the firm in August of 2021, and he was supervised by Bankman-Fried and Dan Friedberg, FTX\u2019s former chief compliance officer. Earlier this year, FTX sued Friedberg under its new management, alleging that Friedberg aided in fraud as Bankman-Fried\u2019s \u201cfixer<\/a>.\u201d<\/p>\n

The only exception, at least in writing, was for customers who enrolled in spot margin trading on the exchange. In that scenario, collateral posted by customers to take positions could be used by FTX, Sun said. Still, the facts didn\u2019t support a multi-billion dollar hole in Bankman-Fried\u2019s exchange, the lawyer recounted in court.<\/p>\n

Throughout the conversation, Sun said Bankman-Fried didn\u2019t seem surprised and his responses came across as muted. Before their walk, Sun said his then-boss\u2019s demeanor\u2014as he typed on a laptop and took calls\u2014contrasted with other employees present at the Bahamian resort.<\/p>\n

Sun said the disparity was especially noticeable when it came to Nishad Singh, FTX\u2019s former head of engineering and an alleged co-conspirator<\/a> in Bankman-Fried\u2019s case.<\/p>\n

\u201cIt looked like his soul had been pulled away from him,\u201d Sun said, adding that Singh appeared \u201cpale\u201d and \u201cgray.\u201d<\/p>\n

Later that November night, Sun said Nishad detailed to him how customer funds could be plucked from FTX accounts through Bankman-Fried\u2019s trading firm, Alameda Research. FTX\u2019s former general counsel said he resigned the next day.<\/p>\n

Sun said that he was \u201cshocked\u201d to learn in August, months before, that Alameda\u2019s trading positions couldn\u2019t be liquidated on FTX. At the time, Sun said he had no idea that it was a pivotal component of Alameda\u2019s alleged ability to raid customer accounts.\u00a0<\/p>\n

Earlier in Bankman-Fried\u2019s criminal trial, FTX co-founder and alleged co-conspirator Gary Wang said that allowing Alameda\u2019s trading accounts to go negative and not be liquidated contributed to Alameda\u2019s abilities to make \u201cunlimited withdrawals<\/a>\u201d from FTX.<\/p>\n

After pushing for a so-called \u201cdelayed liquidation\u201d to apply to Alameda\u2019s positions, Sun said he \u201ccompleted everything on the legal front for that\u201d to be implemented, yet it got hung up on the business side of things at FTX.<\/p>\n

During his time as general counsel at FTX, Sun said he was involved in structuring several personal loans made to FTX insiders. It was in the neighborhood of 30 to 40 transactions, he recalled, which added up to $2 billion worth of loans.<\/p>\n

Sun said he received a loan from Alameda himself. He used his $2.3 million loan\u2014part of a \u201cmanagement incentive\u201d program\u2014to purchase a home in the Bahamas and relocate to the country. During his stint at FTX, he also received $3.5 million in bonus pay, Sun said.<\/p>\n

Meanwhile, Sun said he was under the impression that FTX customer funds were segregated from company cash, and customers would be able to make withdrawals if the exchange ever ran into solvency issues. Protecting customer funds was a core value at FTX, he said.<\/p>\n

\u201cI had no idea that customer funds were being misused,\u201d Sun said. \u201cEverything was unequivocally [that] FTX protects customer funds\u2014100%.\u201d<\/p>\n

Edited by Stacy Elliott<\/a>.<\/i><\/p>\n

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<\/p>\n

Stay on top of crypto news, get daily updates in your inbox.<\/h3>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

FTX former general counsel, Can Sun, testified on Thursday that Sam Bankman-Fried asked him to craft \u201clegal justifications\u201d to explain why billions of dollars of customer funds were missing, as the exchange struggled to process customer withdrawals last November. As FTX melted down, Bankman-Fried thought the exchange could raise money from investment fund Apollo to […]<\/p>\n","protected":false},"author":2,"featured_media":145151,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[230,225,221,227,226,228,229,60,223,224,222],"class_list":["post-179169","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency","tag-brave","tag-coinbase","tag-crypto","tag-decentralised","tag-decentralized","tag-decentralized-exchange","tag-erc-20","tag-featured","tag-meme-coin","tag-robinhood","tag-solana"],"_links":{"self":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/179169","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/comments?post=179169"}],"version-history":[{"count":2,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/179169\/revisions"}],"predecessor-version":[{"id":179171,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/179169\/revisions\/179171"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media\/145151"}],"wp:attachment":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media?parent=179169"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/categories?post=179169"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/tags?post=179169"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}