© Reuters. FILE PHOTO: Former FTX Chief Executive Sam Bankman-Fried, who faces fraud charges over the collapse of the bankrupt cryptocurrency exchange, leaves federal court in New York City, U.S., February 9, 2023. REUTERS/Mike Segar/File Photo
By Jody Godoy
(Reuters) – As FTX founder Sam Bankman-Fried prepares to takes the stand at his trial on charges of taking billions in customer funds, he is likely to be asked about online posts assuring users the cryptocurrency exchange was safe.
Here are some of the posts that appeared on the messaging platform X, formerly known as Twitter, that Bankman-Fried will likely be asked about:
“FTX is fine. Assets are fine”
Jurors at the trial saw screenshots of a deleted thread that Bankman-Fried posted on Nov. 7 assuring the world the exchange was “fine,” amid a flood of redemption requests. The crypto mogul also wrote that “FTX has enough to cover all client holdings.”
Gary Wang, FTX’s former chief technology officer, testified that FTX did not actually have the assets to cover withdrawals.
Wang said Bankman-Fried also posted a misleading tweet on FTX’s official account blaming delays in redeeming stablecoins, which are digital assets meant to track currencies, on banks being closed.
FTX had actually run out of stablecoins, Wang said.
“Backstopping customer assets should always be primary. Everything else is secondary.”
Prosecutors allege Bankman-Fried misled FTX customers about the safety of their assets before the exchange filed for bankruptcy in November 2022.
Caroline Ellison, Alameda’s former chief executive, testified at trial that Bankman-Fried’s post about “backstopping” customer assets on June 27, 2022, was misleading.
Alameda had borrowed several billion dollars of FTX customer assets to repay its lenders the month before, she said.
Wang also testified that the customer “backstop fund” FTX listed publicly was a “fake number.”
“We don’t invest client assets, even in treasuries.”
In another of Bankman-Fried’s deleted posts from Nov. 7, he said FTX did not invest customer funds.
“We have a long history of safeguarding client assets and that remains true today,” he said in the thread.
Ellison testified at trial that by the summer of 2022, Alameda was drawing from FTX customer funds to make venture investments.
She recounted living in “dread” of FTX customers withdrawing too much from the exchange, as she knew Alameda had depleted the funds.
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