FTX CEO Counters Claims of Zero Losses in Exchange Collapse

1. FTX CEO John Ray refutes former CEO Sam Bankman-Fried’s claim of zero losses for customers in the exchange’s 2022 collapse.
2. Ray emphasizes that the restoration of funds does not absolve Bankman-Fried of criminal responsibility.
3. Ray reveals the dire financial state upon his takeover, with only 105 bitcoins left compared to the owed 100,000 bitcoins, indicating significant unrecoverable losses.

Current FTX CEO John J. Ray III has vehemently opposed former CEO Sam Bankman-Fried’s assertion that customers incurred “zero” losses in the exchange’s collapse in 2022. Ray refutes Bankman-Fried’s claims, labeling them as “categorically, callously, and demonstrably false.“

In a victim impact statement submitted by Ray on behalf of FTX and its subsidiaries to New York District Court Judge Lewis Kaplan, Ray challenges Bankman-Fried’s portrayal of the exchange’s solvency, deeming it a “mischaracterization.” Despite Bankman-Fried’s claims, the estate expects to reimburse customers in full, as stated in their January statement.

Critique of Bankman-Fried’s Defense

Bankman-Fried and his legal team have leaned on the estate’s recovery efforts. Further, he is advocating for a reduced sentence based on the belief that customers, lenders, and investors suffered no harm. However, Ray argues that the restoration of funds does not absolve Bankman-Fried of criminal culpability.

Ray highlights the dire financial situation upon his assumption of leadership, revealing that the exchange possessed a meager 105 bitcoins compared to the nearly 100,000 bitcoins owed to customers. While some assets were recovered, others, including expenses on investments and access to influential figures, remain unrecoverable.

Implications for Customers

Despite the current plan to reimburse customers, Ray acknowledges widespread discontent among FTX’s clientele regarding the valuation of their funds. Refunds will be based on portfolio values at the time of bankruptcy, not the present higher valuation, leaving customers at a significant economic disadvantage.

Numerous victim impact statements from FTX customers further underscore the emotional and financial repercussions of the exchange’s collapse. Ray emphasizes that despite asset appreciation and recovery efforts, stakeholders across various categories continue to endure losses and distress.

Ray concludes by dispelling any notion that the recovery efforts negate the need for bankruptcy proceedings, emphasizing the enduring suffering experienced by affected parties.