FTX former general counsel, Can Sun, testified on Thursday that Sam Bankman-Fried asked him to craft “legal justifications” to explain why billions of dollars of customer funds were missing, as the exchange struggled to process customer withdrawals last November.

As FTX melted down, Bankman-Fried thought the exchange could raise money from investment fund Apollo to stay afloat and satisfy customers rushing for the exit. The catch: Apollo wanted to know how a $7 billion shortfall could exist at the once popular exchange.

There were no legal justifications that were supported by the facts, Sun said he told Bankman-Fried as they strolled through The Albany—a luxury resort in the Bahamas that housed FTX’s headquarters—during a one-to-one chat.

“Yup, yup,” Sun recalled Bankman-Fried saying as he acknowledged several possible explanations that didn’t hold up. “Got it.”

It wouldn’t be viable to say that billions of funds were taken from dormant customer accounts, Sun explained. And the exchange’s terms of service, which Sun helped update earlier that year, explicitly stated the exchange couldn’t touch customer assets.

Sun joined the firm in August of 2021, and he was supervised by Bankman-Fried and Dan Friedberg, FTX’s former chief compliance o

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Author: André Beganski

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