John Ray exposes ‘vast’ harm to FTX customers, counters SBF’s solvency claims

FTX CEO John Ray III has debunked Sam Bankman-Fried’s (SBF) claims about the level of losses suffered by users of the defunct exchange.

In a March 20 letter to Judge Kaplan, Ray said Bankman-Fried’s statements were “categorically, callously, and demonstrably false” because the exchange users would “never be in the same position they would have been had they not crossed paths” with the convicted founder and his companies.

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Over the past weeks, SBF’s lawyers have called for a reduced prison sentence, arguing that the failed exchange was solvent at its bankruptcy and that there were no tangible losses as the bankruptcy proceedings would ensure full recovery “with interest” to all concerned parties.

‘Vast harm’

However, Ray countered these arguments, saying the harm done to FTX customers was “vast,” and SBF has shown no remorse for his actions.

Ray stated:

“When I took over as CEO, there were only 105 bitcoins left on the exchange, against customer entitlements of nearly 100,000 bitcoins. Why were the bitcoins missing?”

Ray explained that SBF’s theft of these assets prevents the bankrupt exchange from returning the assets to impacted customers “in-kind” because FTX did not possess the crypto that customers assumed was held in their accounts as of the time of bankruptcy.

He added:

“Even the best conceivable outcome in the Chapter 11 proceeding will not yield a true, full economic recovery by all creditors and non-insider equity investors as if the fraud never happened.”

Ray concluded that SBF has continued to live a life of “delusion,” adding that the disgraced founder did not leave a “solvent nor safe” business at the time of bankruptcy in 2022.

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Restructuring efforts

Meanwhile, Ray praised his restructuring team for transforming “a metaphorical dumpster fire to a debtor-in-possession.”

According to him:

“Things that [SBF] stole, things he converted into other things, whether they were investments in Bahamas real estate, cryptocurrencies or speculative ventures, were successfully recovered through the enormous efforts of a dedicated group of professionals.”

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