The potential defense strategy of Sam Bankman-Fried (SBF) may have already been leaked online, which involves blaming the spectacular collapse of the crypto empire he founded on his ex-girlfriend and former CEO of Alameda Research, Caroline Ellison.
Bankman-Fried deliberately leaked to The New York Times a 700-page document containing his ramblings on a wide range of subjects, including his attempts to justify his actions that led to the crash of FTX in November 2022.
The documents not only showed the complex state of mind Bankman-Fried was in during his house detention but, to some, also offered a potential sneak peek at his possible defense strategy at his trial, which involves blaming the collapse of his crypto empire on his ex-girlfriend Ellison.
In the documents, the crypto mogul, once regarded as the golden boy of cryptocurrency, criticized his ex-lover and former CEO of Alameda Research, a crypto hedge fund he co-founded.
He highlighted that Ellison was ill-equipped for her position and did not implement proper trading strategies, which he believed could have shielded their business from market tumult.
In the months since his empire collapsed, Bankman-Fried has been throwing Ellison under the bus.
“She continually avoided talking about risk management — dodging my suggestions — until it was too late,” SBF said in a draft titled “Alameda’s Failure to Hedge.”
“Every time that I reached out with suggestions, it just made her feel worse. I’m sure that being exes didn’t help,” he added.
But, it was not just Ellison who earned Bankman-Fried’s ire, as revealed in the deliberately leaked documents.
The crypto entrepreneur, who started his career at the trading firm Jane Street Capital in 2013, also criticized Sam Trabucco, the co-founder of Alameda Research and the former CEO of the crypto hedge fund, before Ellison assumed the post.
Bankman-Fried mentioned that Trabucco was “in the process of quiet quitting” in late 2021, despite his good risk management instincts. Also, he revealed that Trabucco preferred spending his time “going on dates with a ton of guys while sailing around the world on a boat.”
In her plea hearing transcript from December last year, Ellison apologized to FTX investors, admitting that Bankman-Fried had directed her to co-mingle funds since 2019.
“From 2019 to 2022, I was aware that Alameda was provided access to a borrowing facility on FTX.com, the cryptocurrency exchange run by Mr. Bankman-Fried,” Ellison said, admitting that she “understood that executives had implemented special settings on Alameda’s FTX.com account that permitted Alameda to maintain negative balances in fiat currencies and cryptocurrencies.”
She also revealed that she “agreed with Mr. Bankman-Fried and others not to publicly disclose the true nature of the relationship between Alameda and FTX, including Alameda’s credit arrangement. I also understood that Mr. Bankman-Fried and others concealed the source and nature of those funds.”
Ellison said she was “truly sorry” for defrauding customers, investors and lenders and admitted that she knew what they did “was wrong.”
