Sam Bankman-Fried is once more difficult the core narrative of his downfall: that FTX was bancrupt when it collapsed in November 2022.
In a 15-page report written from jail and dated Sept. 30, the convicted founder claimed the change “was by no means bancrupt” however merely trapped in a “liquidity disaster” after clients pulled $5 billion in two days.
He argued that FTX and its buying and selling arm, Alameda Analysis, collectively held $25 billion in belongings and $16 billion in fairness worth towards about $13 billion in liabilities. In response to him, his companies had sufficient to repay clients in full if the corporate had been allowed to proceed working.
He wrote:
“FTX at all times had enough belongings to repay all clients, in form, and supply important worth to fairness holders as nicely. That’s what would have occurred if attorneys hadn’t taken over FTX.”
As an alternative, Bankman-Fried blames outdoors counsel and new CEO John J. Ray III for pushing FTX into Chapter 11 earlier than rescue financing could possibly be accomplished.
His framing of FTX’s challenge as a liquidity downside, relatively than insolvency, serves to melt allegations of fraud and redirects blame towards the authorized workforce that froze operations.
If accepted, it transforms the implosion from considered one of misused deposits right into a fixable financial institution run minimize brief by overzealous attorneys.
Solvency by hindsight
In his report, Bankman-Fried treats FTX’s frozen portfolio as if it had survived intact via your complete 2023–25 market restoration.
He reprices the bankrupt agency’s holdings in Solana, Robinhood, Sui, Anthropic, and even the now-worthless FTT token at present values, suggesting that by the top of this yr, the basket can be price roughly $136 billion. This may simply cowl the $25 billion he cites in buyer and creditor claims.
From there, he insists, everybody may have been paid “in full, in form,” and fairness buyers would nonetheless have walked away with billions.
Nonetheless, that reasoning is flawed as it’s “solvency by bull market.”
Chapter legislation doesn’t permit a failed firm to maintain buying and selling for years within the hope that rising costs will restore its stability sheet. As soon as Chapter 11 is filed, claims are frozen on the petition date, transformed to {dollars}, and pursued via restoration, not hypothesis.
As former FTX common counsel Ryne Miller identified:
“That week in November 2022, belongings available have been nothing close to ample, and the founders have been fabricating asset lists (and desperately chasing new buyers). The cash have been gone, of us. Your cash have been gone. That’s why chapter occurred.”
Which means that a lot of FTX’s portfolio was constructed with commingled buyer funds. No court docket would have permitted these belongings to stay in danger whereas administration gambled on a rebound.
Bankman-Fried’s math solely works if regulators and collectors had let an change below prison and liquidity stress preserve working usually for 2 extra years, a state of affairs that borders on fantasy.
The FTX reboot that by no means occurred
The identical optimism underlies his declare that FTX was “shut down too early.”
Bankman-Fried insists the change was nonetheless incomes about $3 million a day and practically $1 billion a yr when Ray halted operations. He additionally maintains that administration had recognized $6 billion to $8 billion in emergency financing that might have closed the opening “by the top of November 2022.”
That line of argument assumes FTX remained a going concern, that buying and selling would have continued, clients would have stayed, and the enterprise portfolio may have averted fire-sale reductions.
However by mid-November, the change confronted a whole collapse of confidence. Counterparties have been fleeing, licenses have been suspended, and legislation enforcement businesses have been circling. Underneath these situations, preserving FTX stay would have risked deeper losses and regulatory backlash.
Nonetheless, trade consultants famous that the chapter property selected the safer route of freezing accounts, preserving what remained, and pursuing orderly asset restoration below court docket supervision.
Actually, Miller advised that the chapter property’s choice helped salvage some worth, relatively than destroying it.
In response to him, the property’s disciplined administration of FTX’s Solana and Anthropic stakes, each of which appreciated sharply within the restoration, turned one of many predominant causes collectors could now be made entire.
Which means that Bankman-Fried’s portrait of a worthwhile agency unfairly shuttered by attorneys overlooks these realities. His assumptions about ongoing income and investor confidence belong to a world that not exists as soon as belief evaporates.
Competing timelines, competing truths
At its core, the dispute facilities on which timeline defines the corporate’s actuality.
Bankman-Fried measures solvency by 2025 asset costs and a enterprise that by no means closed. The chapter property measures it by what remained in November 2022.
On the property’s timeline, FTX confronted an $8 billion gap, belongings have been illiquid or overstated, and recent funding efforts had stalled. Freezing operations and changing claims to {dollars} have been the one honest course.
On Bankman-Fried’s timeline, the act of intervention precipitated the harm as attorneys “commandeered” the corporate, offered belongings right into a rising market, incurred practically $1 billion in charges, and “destroyed” over $120 billion in hypothetical upside.
That inversion turns the cleanup into the offender. It reframes a typical court-supervised wind-down as a hostile takeover that allegedly vaporized future worth.
But the central reality stays unchanged: when clients demanded their cash, FTX was unable to pay. Every part else is retroactive storytelling.
As blockchain investigator ZachXBT frames it:
“SBF is simply attempting to weaponize the truth that each FTX asset / funding has gone up from picobottom Nov 2022 costs once they factually couldn’t pay out customers on the time of chapter and as an alternative level the chapter workforce because the true villain.”