During the ongoing criminal fraud and conspiracy trial of Sam Bankman-Fried, the former CEO of FTX, it has come to light that he refused requests for assistance from prominent figures in the cryptocurrency industry, including Digital Currency Group CEO Barry Silbert and crypto exchange/lender Celsius.
Before the downfall of his FTX crypto empire in November 2022, Bankman-Fried had played a crucial role in supporting struggling companies in the crypto space, including BlockFi and Voyager. In a crypto industry that lacks a conventional backstop like the Federal Reserve, Bankman-Fried had acted as a financial savior for some hobbled firms.
Barry Silbert’s Appeal for Equity Capital
Bankman-Fried testified during his trial that Barry Silbert, the CEO of Digital Currency Group (DCG), had approached him seeking equity capital for DCG’s Genesis subsidiary. This request occurred during a crypto market downturn last year. Genesis had experienced significant losses due to the collapse of the crypto hedge fund Three Arrows Capital. The situation led to Genesis filing for bankruptcy and discontinuing its trading services. DCG is also the owner of CoinDesk.
Rejection of Celsius’ Emergency Funds Request
Bankman-Fried further revealed that Celsius, a crypto exchange and lending platform, had also reached out to him for emergency funds. However, he declined the request, and Celsius eventually filed for bankruptcy in July 2022. This bankruptcy occurred before the collapses of Voyager, FTX, and BlockFi, which followed in subsequent months.
Bankman-Fried’s testimony sheds light on his decision-making process in extending assistance to distressed crypto companies. His trial continues to be closely watched as it unfolds, given his significant role in the crypto industry and his interactions with other key players.