FTX CEO John Ray calls Sam Bankman-Fried’s zero-harm claim ‘reckless’ and ‘false’

FTX crypto exchange’s current chief John J. Ray III disputed former leader Sam Bankman-Fried’s argument that there was “zero” harm to customers in the platform’s disastrous collapse in 2022, calling the argument “reckless” and “false” in a new filing submitted Wednesday. 

In an earlier Tuesday filing, Bankman-Fried’s defense team argued against the prosecutors’ proposed prison time of 40 to 50 years that there were “never losses” in the FTX collapse, as creditor claims would be paid in full with the bankruptcy proceedings. Bankman-Fried’s lawyers previously requested a prison sentence of 63 to 78 months.

“I can assure the Court that each of these statements is categorically, callously, and demonstrably false,” Ray wrote in the Wednesday filing. “Customers will never be in the same position they would have been had they not crossed paths with Mr. Bankman-Fried and his so-called brand of ‘altruism,’” said Ray, adding that the level of asset recovery is a result of the hard work from dedicated professionals rather than Bankman-Fried.

Asset recovery will unlikely be in full

Ray claimed that Bankman-Fried’s argument that lost value will be returned in full, omits crucial factors.  

Bankman-Fried’s argument ignores the fact that victims who held bitcoin in FTX at collapse will receive a recovered value that is 400% lower than today’s, as the distribution value is set on the petition date, Ray told the court. Even so, their customer accounts are likely “incorrect” due to “backdoor” borrowing from Alameda Research, the FTX CEO added.

“And there are plenty of things we did not get back, like the bribes to Chinese officials or the hundreds of millions of dollars he spent to buy access to or time with celebrities or politicians or investments for which he grossly overpaid having done zero diligence,” Ray said. 

Ray also said in the filing that there were only 105 BTC left in FTX when he took over, while it owed close to 100,000 BTC to its customers. The missing bitcoin assets were likely used by Bankman-Fried for his personal gains, he added, citing a jury conclusion.

“Mr. Bankman-Fried continues to live a life of delusion,” Ray said. “The ‘business’ he left on November 11, 2022 was neither solvent nor safe. Vast sums of money were stolen by Mr. Bankman-Fried, and he was rightly convicted by a jury of his peers.”

Bankman-Fried was found guilty by a New York jury last year for defrauding investors of FTX and Alameda Research in what prosecutors called "one of the biggest financial frauds in U.S. history."

The sentencing for Bankman-Fried is expected to be announced on March 28.