• Sam Bankman-Fried (SBF), the founder and former CEO of bankrupt FTX Derivatives Exchange, maintains his innocence with respect to stealing users‘ funds.
• In a Thursday morning Substack letter, Bankman-Fried explained that the collapse of FTX and its sister trading firm, Alameda Research, is a function of the broader turmoil that the financial industry has recorded over the past year.
• SBF noted that Alameda Research failed to hedge its market exposure and as a result, lost approximately 80% of its value.

Sam Bankman-Fried (SBF), the founder and former Chief Executive Officer of bankrupt FTX Derivatives Exchange, has maintained his innocence with respect to stealing the trading platform users‘ funds as alleged by Federal Prosecutors. SBF took to the web Thursday morning to address the allegations in a Substack letter.

In the letter, SBF noted that over the course of 2021, the Net Asset Value of Alameda Research grew to $100 billion with $8 billion of net borrowing (leverage), and $7 billion of liquidity on hand. This growth, however, was not enough to protect the firm from the market turmoil that has been taking place across the financial industry over the past year. As a result, Alameda Research failed to hedge its market exposure, and was unable to prevent the firm from losing approximately 80% of its value.

SBF went on to explain that the failure of FTX and Alameda Research was due to a combination of factors, such as the risk inherent in the business, the lack of proper hedging, and the market volatility. He also noted that the firms‘ losses were not due to any fraudulent activity on his part, and that he was not responsible for the losses.

In the letter, SBF urged readers to take the time to understand the complicated nature of the financial industry and the risks associated with it. He also urged readers to look past the sensational headlines and learn about the reality of the industry.

At the end of his letter, SBF reiterated his innocence and his commitment to protecting the interests of trading platform users. He also promised to cooperate with the Federal Prosecutors in their investigation.

Overall, the situation regarding the collapse of FTX and Alameda Research is still ongoing, and it remains to be seen what the outcome will be. However, SBF has maintained his innocence on the matter, and is hoping that his Substack letter will help to clarify the situation and provide some insight into the complexities of the financial industry.