FTX CEO Condemns SBF’s Zero Loss Argument as “Reckless and Inaccurate”

FTX CEO Condemns SBF's Zero Loss Argument as "Reckless and Inaccurate"

FTX CEO Condemns SBF's Zero Loss Argument as "Reckless and Inaccurate"

According to The Block, FTX CEO John J. Ray III has questioned former CEO Sam Bankman-Fried’s argument that the platform incurred “zero” losses for customers in the catastrophic collapse in 2022, calling it “reckless” and “incorrect”.

In a document filed earlier on Tuesday, SBF’s defense team opposed the prosecutor’s proposed 40 to 50-year prison sentence, arguing that FTX’s collapse “never caused any losses” because creditors’ claims would be fully compensated in the bankruptcy process. SBF’s lawyers previously requested a prison term of 63 to 78 months.

Ray also added that the extent of asset recovery is the result of the hard work of professionals, not SBF’s merit.

Assets are unlikely to be fully recovered

Ray also argues that SBF’s argument that the loss value will be fully compensated overlooks some key factors, including the fact that victims holding Bitcoin at the time of FTX’s collapse will receive a recovery value of over 400% lower than today’s value, as the user claims are calculated based on the asset price on the day of bankruptcy protection application (November 11, 2022). The FTX CEO added that even so, due to Alameda Research’s “backdoor” borrowing, the clients’ account balances are likely to be “incorrect”.

Ray stated:

In the document, Ray also mentioned that when he took over FTX, the company only had 105 Bitcoins left, while FTX owed customers nearly 100,000 Bitcoins. He added that these lost Bitcoin assets were likely used by SBF for personal gains, and Ray also referenced the jury’s conclusion.

Last year, a New York jury found SBF guilty of defrauding investors of FTX and Alameda Research in what the prosecutor called “one of the largest financial fraud cases in U.S. history”. SBF’s sentencing hearing is scheduled for March 28.

Related reports: “Prosecutors request judge to sentence 50 years of imprisonment, SBF’s lawyers argue: This is not justice!” “Bloomberg: Oaktree Capital and other companies hold FTX debt, Attestor becomes the largest buyer with a total debt of $394 million.”