Current FTX CEO John J. Ray III is pushing back against his disgraced predecessor Sam Bankman-Fried's claims that customers lost “zero” money in the exchange's 2022 collapse, calling them “categorically, callous and demonstrably false.”
In a victim impact statement written by Ray on behalf of FTX and its subsidiaries, Ray told New York District Court Judge Lewis Kaplan that Bankman-Fried's “delusional” claims that his exchange was solvent were a “mischaracterization” of the estate's January statement that they expect to refund customers the full amount.
Bankman-Fried and his legal team have relied heavily on reorganizing the estate, arguing in his February sentencing motion that “the harm to customers, lenders and investors is zero” and therefore Judge Kaplan is considering a maximum sentence of 6.5 years should be in prison – far less than the 40 to 50 year sentence recommended by prosecutors or the 100 year sentence recommended by the parole board.
But only because the FTX estate had managed to scrape together enough money to pay back the exchange's customers – aided massively by the rise in the price of Bitcoin as well as “tens of thousands of hours spent digging into the rubble of Mr “Bankman to rummage”. “Fried's sprawling criminal enterprise of digging up every possible dollar, token or other asset” — does not mean Bankman-Fried's conduct is not criminal, Ray argued.
Ray told the court that the exchange's coffers were almost empty when he took over – only 105 Bitcoins remained on the platform, compared to the almost 100,000 Bitcoins that were owed to customers.
Some of the lost assets have been recovered, Ray said, while others, including bribes to Chinese officials and the “hundreds of millions of dollars” that Bankman-Fried spent on various investments or buying access to celebrities and politicians, have disappeared forever.
“The damage was enormous. There is no remorse,” Ray wrote in Wednesday’s court filing. “Effective altruism, at least as practiced by Sam Bankman-Fried, was a lie.”
Ray told the court that despite the current plan to get their funds back, many of FTX's customers remain “extremely dissatisfied” with the valuation of their funds.
Because clients are reimbursed based on the value of their portfolios at the time of bankruptcy – not the much higher value today – they will “never return to the same economic situation they would have been in but for today's absence.” “ [Bankman-Fried’s] colossal fraud,” Ray argued.
In their own victim impact statements filed earlier this week, dozens of FTX customers detailed the emotional and financial impact the exchange's collapse had on their personal lives.
“One should not be under the illusion that there is no need because the assets have increased in value or the professionals have been able to recover funds and assets misappropriated or stolen from the estate [to file for bankruptcy]Ray wrote. “Make no mistake; customers, non-sovereign creditors, government creditors and non-insider shareholders have suffered and continue to suffer.”
Bankman-Fried is scheduled to be sentenced March 28.
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