Apollo Global Management balked at a last-minute rescue of FTX after learning billions of dollars in customer funds were unaccounted for and the exchange wasn't able to provide legal justifications for the shortfall, a former top lawyer at Sam Bankman-Fried's crypto empire testified.
Can Sun told federal court in New York that despite entreaties from Bankman-Fried, he couldn't find anything that would explain why the missing customer money had been channeled to Alameda Research, an affiliated hedge fund. He'd been asked to come up with a possible justification after a call with Apollo occurring just days before both FTX and Alameda filed for bankruptcy.
He broke the news to Bankman-Fried, FTX's co-founder, that there was no justification while they took a walk a bit later.
"I was actually expecting a bigger response but it was very muted," Sun, who joined FTX as a general counsel in August 2021, said at Bankman-Fried's fraud trial. "He was not surprised at all."
Apollo quickly pulled out of talks to finance FTX after learning of the exchange's financial situation. The private equity firm declined to comment on Sun's testimony.
Days later, the crypto exchange imploded.
Sun revealed during his testimony that he had a nonprosecution agreement with the government. He said he didn't do anything wrong, but was involved in some transactions that in hindsight could have involved misappropriated customer funds.
The 37-year-old is the latest company insider to testify at the trial, bolstering prosecutors' allegations that Bankman-Fried oversaw a massive fraud.