The former head of the bankrupt FTX exchange, Sam Bankman-Fried, stated that his company “was never insolvent” and could have fully returned clients’ funds. In a new document published at the end of September, he blamed the legal team and new management for “destroying” FTX by dragging out the bankruptcy process and selling assets at undervalued prices.
“It was a liquidity problem, not bankruptcy”
In a 15-page statement dated September 30, Sam claims that at the time of the liquidity crisis in November 2022, FTX had $25 billion in assets and $16 billion in equity, which, according to him, fully covered $8 billion in client obligations.
“The FTX crisis in November 2022 was a liquidity crisis, that is, a temporary cash shortage. The problem could have been resolved by the end of the month—until outside lawyers took control of the company,” the document says.
According to his version, it was the law firm and new CEO John Ray III who insisted on filing for bankruptcy, even though the company could have regained solvency.
Bankman-Fried claims that the legal team acted out of self-interest, receiving nearly $1 billion in fees and consulting payments, and also “distorted the real financial position” of the company by calling FTX “hopelessly insolvent.”
Loss of assets and undervalued sales
The document also states that during the bankruptcy, $7 billion worth of FTT tokens were written off and other assets were sold at prices significantly below market value. According to Bankman-Fried, if the company had remained under his management, the assets of FTX and its subsidiary Alameda Research could be worth about $136 billion today.
“All these funds could have been distributed among investors if the managers had not destroyed the company,” he claims.
At the time of publication, representatives of FTX’s bankruptcy administration declined to comment on the statement.
Bankman-Fried’s family seeks a pardon
The collapse of FTX in 2022 became one of the largest scandals in the history of the cryptocurrency industry. The court established that Alameda Research had “secret access” to FTX’s risk management system, allowing it to borrow client funds without collateral. This led to inflated balances and the creation of an illusion of the company’s stability.
After these facts were revealed, clients began to massively withdraw funds, triggering a “digital bank run.” By the time payments were halted, there was an $8 billion shortfall, which triggered a chain reaction across the industry and led to a $200 billion drop in total market capitalization.
Bankman-Fried was arrested in the Bahamas in December 2022 and a year later was found guilty on multiple counts of fraud and conspiracy. He is now serving a 25-year sentence but continues to insist on his innocence and has filed an appeal.
His family claims that the case was politically motivated. According to them, Bankman-Fried became a “victim of the Biden administration” after he reduced donations to the Democratic Party and shifted support to the Republicans.
Currently, the former FTX head’s lawyers are seeking a pardon from President Donald Trump, who previously pardoned Silk Road creator Ross Ulbricht and Binance co-founder Changpeng Zhao.
What’s next?
The FTX story continues to spark debate. On one hand, the bankruptcy team claims that Bankman-Fried’s legacy is “financial chaos and deception.” On the other hand, the entrepreneur himself insists that the exchange could have recovered if it had been allowed to.
Experts note that Bankman-Fried’s new wave of statements may be an attempt to influence the appeal process and change public perception of the case, which has become a symbol of the fall of the “crypto-genius era.”
Read more: Investors are withdrawing funds from US Bitcoin and Ethereum ETFs: all funds showed zero inflow
