FTX Insolvency Lead Disapproves Bankman-Fried’s Unrealistic Defence Citing Bitcoins Missing
The famous insolvency lawyer tapped to guide the demolition of FTX, a fallen crypto exchange, claimed that those affected are still suffering.
Through a blazing victim impact statement, FTX’s chief executive faulted Sam Bankman-Fried (SBF), the crypto firm’s fallen founder, of revealing ‘coldly, categorically, and evidently untrue’ claims concerning client losses while depicting no guilt for the amount pilfered in one of the biggest frauds to take place.
FTX Insolvency Head Disapproves Bankman-Fried Claims
The statement from John J. Ray III, a veteran corporate restructuring expert overseeing FTX’s insolvency, directly disapproved of SBF’s claims that the ‘damage to clients, investors, and lenders does not exist.’ Additionally, he dismissed the idea that ‘no money was lost’ since FTX entities were financially sound when the company fell last November.
He wrote a statement filed ahead of SBF’s sentencing in a federal court. In this case, he claimed that the accused quoted 14 lines of the transcript from the January 31 insolvency court hearing and three news reports.
Nevertheless, he overlooks pages of crucial qualifications, notes, and cautions linked to the hearing. Ray wrote that the damage was wide and regret did not exist. He also noted that actual humanity, at least as lived by the accused, was false.
SBF created an image of a socially conscious genius as he converted FTX into a crypto giant. In November 2023, he was convicted on conspiracy and fraud charges. According to prosecutors, he planned a protracted scheme to tap client funds to pay for risky bets, political donations, and luxury real estate acquisitions.
Bankman-Fried Hurt Endless Victims
Ray claimed that ‘despite a huge team of devoted people’ working eagerly over the past several months to recoup funds and stabilize the exchange’s operations, the possibility of SBF’s victims being made whole is non-existent. Specifically, he noted that ‘clients, government and non-government creditors, and non-insider stockholders have been hurt and continue feeling hurt.
SBF’s argument regarding the firm’s solvency was opposed by ‘back door’ borrowing by Alameda Research, a sister trading company. According to Ray, this meant client account statements indicating cryptocurrency holdings were wrong.
Following SBF’s exit, only 105 bitcoins were left, against user claims for almost 100000 coins. According to a jury, SBF linked the missing bitcoins to theft and subsequent conversion into other things. As such, their availability for return to victims is non-existent.
Ray noted that expected recoveries are ‘not assured’ and still greatly rely on the ‘intentional subordination’ of more than $9B in government fines. Additionally, the retrievals depend on consensual settlements with United States agencies and triumph in future legal tussles.
Bankman-Fried Oversaw FTX Collapse
The crumbling of FTX in November 2023 caused shockwaves across the crypto sector, pushing Bitcoin to less than $16000. Besides, at least $8B in client deposits disappeared, resulting in authorities calling it one of the biggest financial frauds in the history of the United States.
At one point, SBF was a fixture on conference states and magazine covers. However, he faces up to 50 years behind bars following sentencing by Lewis Kaplan, a United States District Judge, on March 28. SBF’s lawyers have claimed he should get a lighter sentence.
The sentencing comes only more than one year after Ray, who previously managed Enron’s insolvency, acquired control of FTX desperately to stabilize the company. He said his team’s initial move was imploring the insolvency court’s automatic stay to stop a catastrophic fall linked to SBF’s crimes from overwhelming the crypto.
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