FTX’s former general counsel Can Sun testified Thursday in federal court that he was shocked to learn FTX founder Sam Bankman-Fried (SBF) had secretly transferred billions in customer funds to his hedge fund Alameda Research. Sun told prosecutors he resigned the day after realizing the scope of customer money siphoned, following spreadsheets showing $7 billion was missing.
‘Funds Had Been Misappropriated,’ Former FTX Lawyer Says
Can Sun, former general counsel of the failed crypto exchange FTX, took the stand Thursday in Sam Bankman-Fried‘s criminal fraud trial. Sun told federal prosecutors he was unaware FTX had secretly transferred customer funds to Bankman-Fried’s trading firm Alameda Research.
“I was shocked. There were $7 billion missing,” testified Sun about learning the extent of fraudulent transfers. Prosecutors displayed FTX spreadsheets to Sun, who said he concluded “funds had been misappropriated.” Sun’s testimony was published by Matthew Russell Lee from the Inner City Press.
Sun outlined resigning as general counsel the day after his revelation, despite joining FTX from the law firm Fenwick & West. Sun claimed he approached SBF regarding the concerns, yet the response from the FTX leader was notably muted.
“I expected a bigger response. But all [SBF] said was, Got it. He didn’t seem surprised,” Sun remarked about Bankman-Fried’s calm reaction.
Sun recalled SBF asking him to provide a “legal justification” for the missing billions after a private equity firm inquired. “No. He did not tell me anything,” answered Sun when asked if SBF explained the transfers.
Under cross-examination, SBF’s attorney Mark Cohen discussed Sun’s FTX employment contract showing $3.5 million in loans and bonuses from Alameda Research. Questioned if connected, Sun stated, “Well they were both about my employment.”
Sun conceded to signing a non-prosecution agreement with prosecutors requiring truthful testimony. “You could be prosecuted if you don’t tell the truth?” Cohen inquired. Sun responded with a succinct “yes.” SBF’s attorney also pressed Sun on whether encrypted messaging apps were used by the legal department.
Sun’s testimony follows former FTX and Alameda executives Caroline Ellison, Gary Wang and Nishad Singh cooperating with prosecutors after pleading guilty. Bankman-Fried potentially faces over 100 years in prison if convicted of fraud and conspiracy charges, for which he has pleaded not guilty.
What do you think about the testimony from Sun and the $7 billion missing? Share your thoughts and opinions about this subject in the comments section below.