Unveiling SBF’s Defense Draft of up to 250 pages I did what I believed was right.

Unveiling SBF's 250-page defense draft, I followed my convictions.

Source: David Yaffe-Bellany, The New York Times

Translation: Joy, LianGuaiNews

Sam Bankman-Fried, the founder of the failed cryptocurrency exchange FTX, made a candid assessment of his predicament in the final part of his unreleased 15,000-word Twitter post. “I’m bankrupt, wearing an ankle monitor, one of the most hated people in the world,” he wrote. “I may never be able to do anything to have a positive impact on my life again.”

He added, “The fact is, I did what I thought was right.”

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SBF has been charged with fraud in relation to the collapse of FTX and was arrested in December 2022, subsequently released on bail and placed under house arrest. He then wrote hundreds of pages of sometimes rambling self-justifications, covering everything from childhood memories to mathematical calculations.

In his unpublished draft of the post, he formatted it as a series of tweets, approximately 70 pages of typing, which criticized some of his closest colleagues and interspersed his arguments with photos from his high school years and images of popcorn and garden mazes. Every few pages, there were music video links featuring Alicia Keys, Katy Perry, or Rihanna, corresponding to key moments in the narrative.

The 31-year-old SBF was once a prolific poster on Twitter, tagging the post as “draft within a draft of ideas” and including 29 other links to documents related to FTX. One document titled “Inception V2” was a lengthy attack on the company’s bankruptcy lawyer, featuring screenshots from Christopher Nolan’s 2010 film. A separate link opened a spreadsheet listing SBF’s Amazon orders since 2021.

These approximately 250 pages of documents have never been reported before, offering a window into SBF’s mindset during his eight months of home detention, as his bail was recently revoked by a judge in August. The contents also provide new details about his potential legal defense, beyond what his lawyers have revealed in court, revealing how he intends to prove the legitimacy of his actions at the trial scheduled for October 3.

Prosecutors allege that SBF orchestrated a scheme to transfer FTX customer funds to his hedge fund, Alameda Research, so that his company could engage in venture capital investments, purchase real estate, and donate to politicians. He has not previously pleaded guilty as he could face decades in prison if convicted.

During his house arrest, SBF sent these documents to Tiffany Fong, a social media influencer with a YouTube channel about the crypto industry. Fong shared the contents with The New York Times.

“He liked that I didn’t work for anyone,” she said. “He thought I could draw my own conclusions.”

Representatives of SBF declined to comment.

In several documents, SBF accused his former girlfriend and former deputy Caroline Ellison of contributing to the collapse of FTX. He claimed that she was not capable of handling the responsibilities he gave her as the head of Alameda, and alleged that she cried during a meeting with him and refused to develop trading strategies that could have protected his company from market crashes.

“She consistently dodged risk management discussions – avoiding my suggestions – until it was too late,” he wrote in a document titled “Alameda’s Hedge Failure”. “Every time I made a suggestion, it only made her feel worse. I am convinced that being my ex did not help.”

In the Twitter draft, SBF also criticized Alameda’s Co-CEO Sam Trabucco. The document stated that Trabucco and Ellison did not get along. While Trabucco had good instincts for risk management, by the end of 2021, he was “quietly in the process of exiting.”

SBF wrote that Trabucco preferred “sailing around the world and dating a bunch of men.” He then linked to Rihanna’s music video “Cheers (Drink to That)”.

Ellison and two other executives of SBF have admitted to fraud charges and agreed to testify against him. In addition, a fourth person pleaded guilty this month but did not commit to cooperating and testifying. Trabucco has not been charged with any wrongdoing.

Trabucco and Ellison’s lawyers declined to comment.

FTX was once hailed as a trusted force in the unregulated world of cryptocurrencies, but it collapsed in November last year, causing billions of dollars in losses to users and dealing a devastating blow to the entire industry. After his arrest, SBF was granted bail and allowed to live with his parents in Palo Alto, California, where his father has long served as a law professor at Stanford University. They have a German shepherd named Sandor as their guard dog.

Over the past few months, SBF has hosted guests such as writer Michael Lewis and several journalists, as Lewis works on a book about him.

Very few people have had as much access as KOL Fong, who had established a good relationship with SBF online before the failure of FTX. Fong said she visited SBF at his parents’ home more than ten times and recorded their conversations, which she may eventually publish.

Fong said that during his house arrest, SBF spent most of his time in the study, playing computer games, setting up chess boards, and sometimes sleeping on the couch. She said that most of the time, he was writing legal defenses and recording his thoughts on the case in a hundreds of pages long Google document. SBF also told her that his family was installing a pickleball court in their yard for him.

SBF handed over these files to Fong in late January this year. It is not clear what he wants her to do with them. Fong suffered losses in the collapse of the cryptocurrency company Celsius Network, and she expressed sympathy for the victims of FTX and doubts about many of SBF’s claims. She sent a document to former Alameda engineer Aditya Baradwaj, who refuted Mr. SBF’s claims point by point, pointing out that Alameda’s hedging would be “irrelevant” if FTX did not abuse customer funds.

In a draft Twitter post, SBF traced his entrepreneurial journey, from his childhood in Palo Alto to the top-floor apartment he purchased near FTX headquarters in the Bahamas. He recalled meeting Trabucco at math camp, where he and future colleagues sneaked out after curfew to bake cheesecake brownies, and described his early admiration for Ellison, calling her “very smart.” He also inserted some personal photos, including one of him holding a T-shirt Trabucco bought for him in high school.

In another section, SBF shared a link to a document he wrote in 2019, “Tonight We’re Young,” which reported on his interaction with Binance founder Zhao Changpeng (aka CZ) at a conference in Taiwan. (He also added a link to the music video for Fun’s “We Are Young.”)

“Tonight is a night of alcohol, women, lasers and noise, of music that throbs,” SBF wrote. “But there’s a strange little climate that seems to accompany me. I’ve crossed paths with CZ a few times tonight, and each time he’s shifted his gaze away from other things and embraced me: People have a lot of ideas about us.”

In November last year, CZ’s post triggered a run on withdrawals that led to FTX’s collapse. Representatives for Binance did not respond to requests for comment.

Some of SBF’s documents detail the arguments made by his lawyers in court. In documents titled “Inception V2,” “Inception V3,” and “Inception Evidence,” SBF claims that law firm Sullivan & Cromwell, which oversaw FTX’s bankruptcy, fabricated the allegation that he misappropriated user funds.

“They played it really well,” he wrote. “I would take my hat off to them if it didn’t ruin everything I care about in life.”

A spokesperson for Sullivan & Cromwell declined to comment. Prosecutors argued that SBF’s statements about the firm amounted to “innuendo.”

In several of the documents, SBF also dissected his history with Ellison and wrote that their relationship “ended the way most of my relationships do.”

“They wanted more intimacy, commitment, and public recognition than I was comfortable with,” he wrote in the post, “and I felt claustrophobic.”

In another document, he stated that despite his strong advocacy, Ellison refused to hedge Alameda’s aggressive trading strategy. He recalled sending her a message that was equivalent to “the harshest words I’ve ever said to her.” (He said he no longer has a record of this message.)

“If Alameda hedged, it would maintain solvency and avoid the entire unfortunate story,” he wrote.

In a Twitter draft, SBF wrote that his concerns about Alameda intensified in the spring of 2022 as he packed his bags for Washington. A group of employees, including Ellison, were frantically discussing potential deficits in the company’s accounts. SBF wrote that he only participated halfway, but he heard enough information to realize that the focus of the conversation was on an account labeled “fiat@”—regulators allege that FTX executives used this account to transfer customer funds to other projects.

“I had heard this name before, but I never knew what it really was,” he wrote.

After admitting guilt, Ellison stated that she and SBF conspired to support Alameda’s financial situation with customer funds. She denies misusing the funds.

“Overall, I won’t lie,” he wrote in a document titled “The Truth.” “This is something I strongly believe.”

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