In a fiery sufferer affect assertion, FTX’s chief government accused the crypto firm’s disgraced founder Sam Bankman-Fried of peddling “categorically, callously, and demonstrably false” claims about buyer losses whereas exhibiting no regret for the billions allegedly stolen in considered one of historical past’s greatest 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 had been solvent when the agency collapsed in November.
“Mr. Bankman-Fried cites 14 strains of the transcript from the January 31, 2024 chapter courtroom listening to and three information reviews of the listening to, Ray wrote within the assertion filed forward of Bankman-Fried’s sentencing in federal courtroom in New York on Friday. “Nevertheless, 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, no less than 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 expenses. Prosecutors allege he orchestrated a years-long scheme to faucet buyer funds to finance dangerous bets, luxurious actual property purchases and political donations.
Ray stated that whereas a “very massive group 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 complete, noting that “prospects, non-governmental collectors, governmental collectors, and non-insider stockholders have suffered and proceed to undergo.”
Bankman-Fried’s rivalry that FTX was solvent was contradicted by “again door” borrowing by Alameda Analysis, a sister buying and selling agency, which meant buyer account statements exhibiting cryptocurrency holdings had been “incorrect,” Ray stated. Solely 105 bitcoins had been left on the FTX change when Bankman-Fried was ousted, towards person claims for practically 100,000 bitcoins.
“Why had 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 accessible 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 stated, in addition to consensual settlements with U.S. businesses and victory in future authorized battles.
FTX’s implosion final November despatched shockwaves by the crypto trade, pushing Bitcoin beneath $16,000. A minimum of $8 billion in buyer deposits went lacking in what authorities have referred to as one of many greatest 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 12 months after Ray, who beforehand oversaw the liquidation of Enron, took management of FTX in a last-ditch bid to stabilize the agency. Ray stated his group’s first transfer was invoking the chapter courtroom’s automated keep to halt a “disastrous collapse attributable to Mr. Bankman-Fried’s crimes” from engulfing the crypto ecosystem.
Ray described Bankman-Fried as persevering with to dwell a “lifetime of delusion,” citing non-public writings revealing the crypto founder weighed utilizing “radical honesty on Twitter” to smear restructuring professionals whereas claiming he had funding “able to make prospects complete.”
“FTX was run for its very quick existence by Mr. Bankman-Fried with hubris, conceitedness, and an entire 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.
