FTX's Former General Counsel Shocked by Billions of Dollars in Secret Transfers
Can Sun, the former general counsel of FTX, testified in federal court on Thursday, revealing his shock upon discovering that FTX founder Sam Bankman-Fried (SBF) had secretly transferred billions of dollars in customer funds to his hedge fund, Alameda Research. Sun told prosecutors that he resigned the day after uncovering the extent of the misappropriation of customer money, which became apparent when spreadsheets showed that $7 billion was missing.
Funds Misappropriated, Says Former FTX Lawyer
Sun, who took the stand during Bankman-Fried's criminal fraud trial, informed federal prosecutors that he had been unaware of FTX's secret transfers of customer funds to Bankman-Fried's trading firm, Alameda Research. He stated that he was shocked to learn about the missing $7 billion and concluded that "funds had been misappropriated." Sun's testimony was made public by Matthew Russell Lee from the Inner City Press.
Resignation Following Revelations
Despite joining FTX from the law firm Fenwick & West, Sun revealed that he resigned as general counsel the day after discovering the fraudulent transfers. He claimed that he approached SBF to address his concerns, but Bankman-Fried's response was surprisingly subdued. Sun recalled that SBF simply said, "Got it," without expressing much surprise.
Lack of Explanation for the Transfers
When asked if Bankman-Fried had explained the transfers, Sun stated that he was not provided with any information. He recounted an incident where SBF asked him to provide a "legal justification" for the missing billions when a private equity firm inquired about them. However, Sun clarified that SBF did not offer any explanation.
Employment Contracts and Non-Prosecution Agreement
During cross-examination, SBF's attorney, Mark Cohen, discussed Sun's employment contract with FTX, which revealed $3.5 million in loans and bonuses from Alameda Research. When asked if these were connected to the case, Sun acknowledged that they were both related to his employment. Sun also confirmed that he had signed a non-prosecution agreement with prosecutors, which required him to provide truthful testimony. When questioned about the consequences of not telling the truth, Sun responded with a simple "yes." Additionally, SBF's attorney inquired about the use of encrypted messaging apps by the legal department, but no further details were provided.
Cooperation and Potential Consequences
Sun's testimony follows the cooperation of former FTX and Alameda executives Caroline Ellison, Gary Wang, and Nishad Singh, who pleaded guilty and provided information to prosecutors. If convicted of fraud and conspiracy charges, Bankman-Fried could face a sentence of over 100 years in prison. However, he has pleaded not guilty to the charges.
Share your thoughts and opinions on Sun's testimony and the missing $7 billion in the comments section below.
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- Gold IRA: Add Some Sparkle To Your Retirement Nest Egg
- Understanding China's Evergrande Crisis – Forbes Advisor
- Saddam Hussein's InvasionHelped Uncage a Bear in 1990 – WSJ
- How do you keep your IRA Gold at Home? It's not exactly legal – WSJ
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By: Jamie Redman
Title: Former FTX General Counsel Testifies About Misappropriation of Funds
Sourced From: news.bitcoin.com/ex-general-counsel-sheds-light-on-ftxs-7b-gap-in-bankman-fried-fraud-trial/
Published Date: Sun, 22 Oct 2023 07:30:59 +0000