In a fiery sufferer impression assertion, FTX’s chief govt accused the crypto firm’s disgraced founder Sam Bankman-Fried of peddling “categorically, callously, and demonstrably false” claims about buyer losses whereas displaying no regret for the billions allegedly stolen in certainly one of historical past’s largest frauds.
The assertion by John J. Ray III, a seasoned company restructuring specialist overseeing FTX’s chapter, instantly rebutted Bankman-Fried’s assertion that the “hurt to prospects, lenders, and traders is zero” and that cash was “not misplaced” as a result of FTX entities have been solvent when the agency collapsed in November.
“Mr. Bankman-Fried cites 14 traces of the transcript from the January 31, 2024 chapter court docket listening to and three information reviews of the listening to, Ray wrote within the assertion filed forward of Bankman-Fried’s sentencing in federal court docket in New York on Friday. “Nonetheless, Mr. Bankman-Fried ignores pages and pages of essential commentary, {qualifications}, and caveats from that listening to.”
“The hurt was huge. The regret is nonexistent. Efficient altruism, at the very least as lived by Samuel Bankman-Fried, was a lie,” Ray wrote.
Bankman-Fried, who cultivated a picture as a socially-conscious wunderkind as he turned FTX right into a crypto behemoth, was convicted in November on fraud and conspiracy fees. Prosecutors allege he orchestrated a years-long scheme to faucet buyer funds to finance dangerous bets, luxurious actual property purchases and political donations.
Ray mentioned that whereas a “very massive staff of devoted people” has labored feverishly over the previous 16 months to recuperate cash and stabilize FTX’s operations, Bankman-Fried’s victims are unlikely to be made entire, noting that “prospects, non-governmental collectors, governmental collectors, and non-insider stockholders have suffered and proceed to endure.”
Bankman-Fried’s competition that FTX was solvent was contradicted by “again door” borrowing by Alameda Analysis, a sister buying and selling agency, which meant buyer account statements displaying cryptocurrency holdings have been “incorrect,” Ray mentioned. Solely 105 bitcoins have been left on the FTX change when Bankman-Fried was ousted, towards person claims for almost 100,000 bitcoins.
“Why have been the bitcoins lacking? A jury has concluded past an inexpensive doubt that Mr. Bankman-Fried stole them and transformed them into different issues,” Ray wrote. “For that purpose, they aren’t out there to be returned in-kind to his victims.”
Anticipated recoveries are “by no means assured” and stay extremely depending on the “voluntary subordination” of over $9 billion in authorities fines, Ray mentioned, in addition to consensual settlements with U.S. companies and victory in future authorized battles.
FTX’s implosion final November despatched shockwaves via the crypto business, pushing Bitcoin under $16,000. A minimum of $8 billion in buyer deposits went lacking in what authorities have known as one of many largest monetary frauds in U.S. historical past.
As soon as a fixture on journal covers and convention levels, Bankman-Fried now faces as much as 50 years in jail when he’s sentenced by U.S. District Decide Lewis Kaplan on March 28. Attorneys for Bankman-Fried have argued he ought to obtain a far lighter punishment.
The sentencing comes simply over a yr after Ray, who beforehand oversaw the liquidation of Enron, took management of FTX in a last-ditch bid to stabilize the agency. Ray mentioned his staff’s first transfer was invoking the chapter court docket’s computerized keep to halt a “disastrous collapse brought on by Mr. Bankman-Fried’s crimes” from engulfing the crypto ecosystem.
Ray described Bankman-Fried as persevering with to stay a “lifetime of delusion,” citing personal writings revealing the crypto founder weighed utilizing “radical honesty on Twitter” to smear restructuring professionals whereas claiming he had funding “able to make prospects entire.”
“FTX was run for its very brief existence by Mr. Bankman-Fried with hubris, vanity, and a whole lack of respect for the fundamental norms of the regulation, which is all of the extra inexcusable given his privileged upbringing,” Ray wrote.
The lead legal professional for Bankman-Fried didn’t instantly reply to a request for remark.
