According to former FTX general counsel Can Sun, Bankman-Fried “was not surprised at all” that billions of dollars were missing.
Former FTX CEO Sam Bankman-Fried instructed former general counsel Can Sun to “come up” with any legal explanation for the $8 billion hole in Alameda Research’s books, according to Sun’s testimony in court on Oct. 19.
Sun flew from Japan to testify in the ongoing trial as part of his nonprosecution agreement with the United States Department of Justice. During his testimony, Sun revealed that he learned of the billion-dollar hole between the two companies on Nov. 7 after receiving a spreadsheet indicating the debt. “I was shocked,” he told jurors.
Asset manager Apollo Capital was intended to receive the spreadsheet as FTX attempted to raise new funding during the “liquidity crunch” of early November. In response to Apollo’s inquiry about the $8 billion hole, Bankman-Fried allegedly asked Sun to “come up with a legal justification.”
As Sun admitted in his testimony, he had considered some legal options. Among them were dormancy fees 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 belonged solely to users:
What’s next in Sam Bankman-Fried’s trial?
Sun’s testimony was part of a busy week in Bankman-Fried’s trial, which saw nine witnesses share details of the months that preceded FTX’s collapse.
Prosecutors are expected to rest their case on Oct. 26 following testimony from two final witnesses. Bankman-Fried’s defense, however, has yet to confirm if it will bring a case.
Bankman-Fried is accused of seven counts of fraud and conspiracy to commit fraud against FTX customers and investors. He faces up to 115 years of jail time if found guilty.