6 Batshit Claims SBF Made in His First Substack Newsletter

In SBF’s world, up is down and down is up. Using that same logic, the FTX founder claimed neither he nor FTX stole customers’ funds and instead blamed the firm’s sudden collapse on a broad crash in cryptocurrency markets. That statement, which SBF echoed in a sporadic series of media appearances prior to his arrest, stands diametrically opposed to the case being made by federal prosecutors, who alleged SBF took billions in FTX customer funds and used them to invest in other companies, buy luxury real estate, and fund Alameda research.

“I didn’t steal funds, and I certainly didn’t stash billions away,” SBF wrote.

Every good fraud story deserves a scapegoat, and SBF sees one in Binance CEO Changpeng “CZ” Zhao. In his post, SBF accused CZ of engaging in an “extremely effective months-long PR campaign against FTX” that rapidly accelerated the firms liquidity crisis. SBF pointed to a November tweet from CZ where the CEO announced Binance would dump its holding of FTX’s native token. That tweet, he claims, led to massive customer withdrawals which stretched FTX thin. SBF described this series of events as a “quick, targeted crash,” caused by CZ.

Binance, it should be noted, was briefly poised to acquire FTX before ultimately deciding to walk away from the proposed deal in early November after taking a look at the flailing company’s books. “Our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help,” a spokesperson for Binance said at the time.

Despite bankruptcy filings and criminal fraud charges, SBF said he was still somehow confident struggling FTX customers could still be made “substantially whole.” In making that point, SBF linked to recent reporting claiming lawyers for FTX had found $5 billion worth of cash and other liquid assets that could potentially be used to pay back an estimated 9 million customers.

“​​Very substantial recovery remains potentially available,” SBF wrote.

That optimism wasn’t shared by current acting FTX CEO John J. Ray, who told lawmakers last month it would likely be difficult to return funds to every customer. That process, he said, was made even more difficult by FTX’s “virtually nonexistent,” record keeping.

SBF evoked the names of the two other doomed crypto firms, Voyager and Celsius, during his post, presumably in an effort to recast FTX’s story as a company beset by an unfortunate crypto collapse, as opposed to old-fashioned fraud.

In Voyager’s case, the company was forced to declare Chapter 11 bankruptcy a little over a month after it restricted its customers from making withdrawals. Voyager said it was unable to give customers their money, in part, because crypto hedge fund Three Arrows Capital owed them around $666 million. Three Arrows Capital, itself in distress, was forced to liquidate assets in June. Celsius, which billed itself as a modern day Robin Hood lending platform, offered customers absurdly high interest rates (up to 18%) on crypto, but was only able to do so by simultaneously making incredibly risky investments. Celsius filed for chapter 11 on July 14.

The real irony here is that both Voyager and Celsius are in reality facing multiple lawsuits and federal investigations. If the FTX saga really is somewhere between Voyager and Celsius, SBF may very well still be heading to jail.

On the question of his connections with Alameda Research (which he founded in 2017), SBF stated he had not run the firm, “for the past few years,” a description directly opposed to recent arguments made by regulators and prosecutors.During a hearing last month before the House Financial Services Committee, acting FTX CEO John J. Ray III said, in practice, there was virtually no separation between FTX and Alameda. While SBF may not have had an official position at the helm of Alameda for some time, prosecutors and recent reports suggest he was nonetheless the de facto king.

“It [FTX and Alameda] was really operated as one company,” Ray said during the hearing. “As a result there is no distinction between the companies.”

In one of the odder sections of his blog, SBF said he was, “dedicating nearly all of my personal assets to customers,” despite previous reports showing he lost nearly all of his billion dollar fortune during FTX’s collapse. In November, SBF told Axios he had $100,000 in his bank account. It’s difficult to see what good that will do in paying back the billions still owed to burned customers. SBF went on to say he has offered all of his personal shares in the stock trading app Robinhood to customers.

The FTX founder covered plenty of mostly well trodden ground in his roughly 2,000 word post, though there were some crucial areas he chose to avoid. Most notably, SBF made no mention of FTX co-Founder Zixiao Wang or Alameda Research CEO Caroline Ellison, who both pleaded guilty to fraud charges and are reportedly working with investigators on SBF’s case.