John J. Ray III, the chief exec of the FTX estate, has filed a statement in Sam Bankman-Fried’s sentencing to “correct material misstatements and omissions in the sentencing submission” made by Bankman-Fried’s team.
Specifically, Ray challenged the narrative that Bankman-Fried’s team presented that “the money was there — not lost.” Ray described this claim as “categorically, callously, and demonstrably false.”
Bankman-Fried and his team have been working to downplay losses from the collapse of FTX and Alameda Research, in part because any losses will likely affect his sentencing.
No, FTX hasn’t recovered all funds and isn’t restarting soon
Read more: FTX bankruptcy firm Sullivan & Cromwell tipped for Binance monitor role
The letter details how the full FTX recovery that has been advertised is based on the value of assets when it declared bankruptcy. Many of these have significantly appreciated, meaning that while users may receive the dollar value back, they will not receive the equivalent they otherwise would have.
Specifically, Ray uses bitcoin as an example of how recovery will seem only partial to users, pointing out that the asset has appreciated by several hundred percent since the petition date, but noted that at the petition date, FTX owed customers nearly 100,000 bitcoins, but only had 105 on hand.
Ray additionally detailed important other pieces of context that have been ignored by Bankman-Fried’s team, including:
- The recovery, in part, has been driven by litigation efforts of the bankruptcy team against other entities that Bankman-Fried transferred assets to
- The recovery depends on multiple government agencies, including the Commodity Futures Trading Commission, Securities and Exchange Commission, and the IRS agreeing to settle its claims against FTX
- The recovery depends on the criminal fines and penalties being subordinated so that other creditors will receive their claims.
Overall, Ray details how Bankman-Fried’s claim of solvency and full recovery are another example of Bankman-Fried living “a life of delusion” and that FTX “was neither solvent nor safe,” and finally, the fact “that things that he stole…were successfully recovered…does not mean that things were not stolen.”
