The attorney for FTX’s former CEO testified

Former FTX attorney Can Sun announced he resigned immediately after mastering that the exchange was applying consumer dollars for bills.

Former FTX attorney Can Sun appeared at the trial of Sam Bankman-Fried. Photo: Bloomberg

On the twelfth day of the trial of former FTX CEO Sam Bankman-Fried, the US Department of Justice prosecutor invited Mr. Can Sun, a former FTX advisor attorney.

Mr Sun explained he had reached a non-prosecution agreement with the US Justice Department to testify at the trial, and had flown from Japan to the United States for this objective. Can Sun started doing work for FTX in August 2021, holding the place of an lawyer advising on legal issues for the exchange.

Based on the terms of use and other paperwork, Mr. Can Sun explained that FTX has no suitable to devote or lend dollars to shoppers.

Sun responded in court that he was unaware of the exchange’s secretive workings, enabling Alameda Research to withdraw FTX users’ money for investments and debt repayment.

The prosecutor also played the video of Sam Bankman-Fried’s interview on Good Morning America in early December 2022, in which the former CEO of FTX stated that FTX’s income shortfall came from the lending mechanism with margin over. Lawyer Sun explained there is no proof to assistance the former FTX CEO’s argument.

In August 2022, Can Sun found that Alameda Research had an unsettled trading account on FTX and was preserving a unfavorable account. He took his issues to the highest management ranges, like CEO Sam Bankman-Fried, Chief Technical Officer Nishad Singh and Chief Legal Officer Dan Friedberg.

The over individuals promised Mr. Sun that they would alter Alameda’s account non-liquidation mechanism to “slow liquidation” and inform all consumers of this. However, this was just an empty guarantee and absolutely nothing else took place.

Attorney Can Sun also evaluated loans offered by Alameda Research to FTX managers, like Sam Bankman-Fried, Gary Wang, Nishad Singh and Ryan Salame. However, the attorney explained he was unaware that the supply of the income movement came from FTX clients’ personal assets.

Mr. Sun admitted he also borrowed $two.three million from Alameda to get a residence in the Bahamas.

When FTX entered crisis in early November 2022, Mr Sun was dragged into a meeting with asset management company Apollo Global Management by FTX managers. This is a single of the investment money contacted by Sam Bankman-Fried in an try to conserve his stock. Apollo then grew to become interested in investing in FTX and asked the exchange to supply monetary reviews. When FTX management acquired the paperwork, the attorney was “shocked” to see that there was a shortfall of up to $seven billion linked to Alameda.

Sam Bankman-Fried then met privately with Sun and asked the attorney to come up with some legal argument to justify the shortfall. Mr Sun proposed a quantity of alternatives, but they had been all unworkable since there was no supporting proof. Sam Bankman-Fried stored his expression unchanged.

Can Sun then spoke to Nishad Singh and FTX’s technical director exposed that the mechanism to reduce Alameda from liquidating also lets the fund to borrow dollars from FTX consumers. Knowing this reality, Mr. Can Sun resigned the upcoming day.

The court then also subpoenaed Robert Bourjeri, former manager of Third Point, an investment fund that poured $35 million into FTX in 2021. Similar to a further investment fund manager, Matt Huang of Paradigm, Bourjeri has stated that he would by no means invest in FTX if he knew the accurate romantic relationship concerning the exchange and Alameda, as effectively as the truth that Alameda had an account that had not been liquidated.

Sam Bankman-Fried’s trial will be suspended for a week and will resume on October 26 (US time).

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