Can Sun Testimony Reveals FTX's Friction over Client Asset

FTX’s dramatic court saga took another turn on Thursday. Can Sun, the crypto exchange’s former general counsel, vehemently denied authorizing the contentious transfer of customer funds to Alameda Research, FTX’s sister company. Sun’s tenure, stretching from August 2021 to the firm’s downfall in November 2022, was marked by his belief in the segregation of client assets, a practice standard in financial custodianship. His revelations amid CEO Sam Bankman-Fried’s intense criminal fraud trial illuminate internal operational conflicts.

Moreover, Assistant U.S. Attorney Danielle Sassoon meticulously dissected FTX’s terms of service with Sun. The goal was to underline the platform’s pledge to keep customer monies “ring-fenced,” untouchable, and distinct from its operational assets. However, Sun’s testimony, provided under a non-prosecution agreement, revealed an unsettling inconsistency. His loan records for FTX and Alameda executives contradicted other documents the Department of Justice presented.

Jurors Review CEO’s Candid Messages

Significantly, the trial’s atmosphere was tense on Wednesday. U.S. District Judge Lewis Kaplan allowed jurors to scrutinize a particularly candid message from Bankman-Fried. The communication, found on the social platform X, occurred shortly after FTX’s bankruptcy. It exposed Bankman-Fried’s stark criticism of regulators, dismissing his previous endorsements of crypto regulation as a public relations strategy.

Additionally, jurors saw a message from Bankman-Fried to a journalist from The Block. His words were sharp, sparing no courtesy for U.S. lawmakers or SEC Chair Gary Gensler. These revelations paint a picture of a CEO at odds with regulatory norms, potentially influencing the ethos within FTX itself.