FTX Bankruptcy Attorney Slams Founder’s Claims, Victims Continue to Suffer, Ahead of Sentencing

FTX Bankruptcy Attorney Slams Founder’s Claims, Victims Continue to Suffer, Ahead of Sentencing

Crypto News – In a passionate statement addressing the aftermath of the collapsed cryptocurrency exchange FTX, the CEO of FTX has accused the company’s founder, Sam Bankman-Fried, of disseminating “categorically, callously, and demonstrably false” information regarding customer losses, all while displaying a notable lack of remorse for the alleged billions siphoned off in what has been termed one of history’s most significant frauds.

John J. Ray III, a highly experienced corporate restructuring specialist entrusted with managing FTX’s bankruptcy proceedings, directly refuted Bankman-Fried’s claims that the collapse caused no harm to customers, lenders, or investors, arguing against Bankman-Fried’s assertion that FTX entities remained solvent at the time of the firm’s demise in November.

Ray’s statement, filed ahead of Bankman-Fried‘s sentencing in federal court in New York, criticized Bankman-Fried for cherry-picking excerpts from the January 31, 2024 bankruptcy court hearing and three news reports while disregarding extensive commentary and caveats provided during the proceedings.

Emphasizing the extensive damage incurred, Ray denounced Bankman-Fried’s apparent lack of remorse, asserting that Bankman-Fried’s touted principles of effective altruism were nothing but a facade.

Bankman-Fried, once celebrated for his image as a socially-conscious prodigy in steering FTX to crypto dominance, was convicted in November on charges of fraud and conspiracy. Prosecutors allege a prolonged scheme orchestrated by Bankman-Fried to divert customer funds towards risky investments, luxury assets, and political contributions.

Despite the concerted efforts of a dedicated team over the past 16 months to salvage funds and stabilize FTX’s operations, Ray expressed doubt that Bankman-Fried’s victims would ever be fully compensated, highlighting the ongoing suffering of customers, creditors, and shareholders.

Ray countered Bankman-Fried’s claims of solvency with evidence of “back door” borrowing by Alameda Research, FTX’s sister trading firm, resulting in erroneous cryptocurrency holdings reported to customers. Ray revealed that a mere 105 bitcoins remained on the FTX exchange when Bankman-Fried was ousted, starkly contrasting with claims from users for nearly 100,000 bitcoins.

Attributing the disappearance of bitcoins to Bankman-Fried, Ray pointed to a jury’s verdict of theft and conversion, rendering restitution in kind impossible.

Ray underscored the uncertainty surrounding anticipated recoveries, contingent upon the cooperation of government agencies and success in legal proceedings. FTX’s collapse in November had seismic repercussions on the crypto industry, precipitating a decline in Bitcoin’s value and the disappearance of at least $8 billion in customer deposits.

Once a prominent figure in both media coverage and industry events, Bankman-Fried now faces a potential prison sentence of up to 50 years, with his sentencing scheduled before U.S. District Judge Lewis Kaplan on March 28. His defense attorneys argue for a more lenient punishment.

The impending sentencing marks over a year since Ray, known for his role in the Enron liquidation, assumed control of FTX in a last-ditch effort to salvage the firm. Ray described Bankman-Fried as delusional, referencing private writings wherein the founder contemplated using social media to tarnish the reputation of restructuring professionals while claiming readiness to compensate customers.

Describing Bankman-Fried’s management of FTX as marked by hubris and a disregard for legal norms, Ray condemned his actions, particularly given his privileged background.

Requests for comment from Bankman-Fried’s legal representation remained unanswered at the time of writing.