At Sam Bankman-Fried’s trial last month, Can Sun was a key witness.
Now, the former FTX general counsel is reportedly at work on a new cryptocurrency exchange designed to fix the issues that sank that company, The Wall Street Journal (WSJ) reported Saturday (Nov. 11).
Sun’s Dubai-based Trek Labs recently won a license from that emirate’s crypto regulator, the report said. He’s joined by another ex-FTX employee, Armani Ferrante, who is CEO of Trek’s holding company in the British Virgin Islands. Ferrante also oversees a partner firm, a digital currency wallet provider called Backpack.
The two told WSJ that they want to use the lessons of FTX’s collapse to guard user funds. Backpack will let users hold funds in their own “self-custody” crypto wallets that the company itself wouldn’t be able to unilaterally access, the executives said.
WSJ noted that it’s not clear how investors will react, given Sun and Ferrante’s ties to FTX, pointing out that Sun name did not appear in an October news release announcing the launch of Backpack Exchange.
“In a post-FTX world, you need trust and transparency to create a true alternative to the other players,” said Sun, who told WSJ he disclosed his role at FTX in regulatory filings, investor materials, and to Dubai’s regulator.
At Bankman-Fried’s trial last month, Sun testified that the company had emailed customers to assure them that their funds would be ringfenced and protected in the event of bankruptcy.
He told the jury he had no knowledge of the inappropriate use of customer funds, and that he believed those funds would be fully protected, segregated and returned to depositors.
Sun, who became general counsel at FTX in August 2021 and stayed until its collapse, testified that — based on numerous conversations he had during his tenure with Bankman-Fried — he believed that FTX customers’ deposits were segregated from the company’s funds.
When asked by prosecutors whether he ever signed off on Alameda Research’s use of FTX customer funds, Sun replied “absolutely not.”
Bankman-Fried was ultimately convicted of fraud and conspiracy and faces what could amount to life in prison upon his sentencing next year.
The launch of Sun’s new company comes as the people running his old employer continue to try to make it whole. To that end, FTX last week sued another crypto exchange, Bybit, hoping to recover $953 million.