NEW YORK – The chief executive of the cryptocurrency company Sam Bankman-Fried founded attacked the onetime crypto power player on Wednesday in a letter to a federal judge scheduled to sentence him next week, saying his claim that customers, lenders and investors were not harmed was callously false and he was living a “life of delusion.”
FTX Trading Limited CEO John J. Ray III told Judge Lewis A. Kaplan that Bankman-Fried's victims have suffered and continue to suffer from his crimes.
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“Mr. Bankman-Fried continues to live a life of delusion. 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,” Ray wrote.
Bankman-Fried, 32, was convicted in November on fraud and conspiracy charges, nearly a year after his December 2022 extradition from the Bahamas to New York for trial. Once touted as a cryptocurrency trailblazer, his companies collapsed in November 2022, less than a year after Bankman-Fried reached a pinnacle that included a Super Bowl advertisement, celebrity endorsements and congressional testimony.
Ray said he wanted to “correct material misstatements and omissions” in a sentencing submission in which a lawyer for Bankman-Fried wrote that statements made during a recent bankruptcy proceeding showed that the “harm to customers, lenders, and investors is zero” because FTX was solvent when it entered bankruptcy proceedings.
“As the lead professional of a very large team who has spent over a year stewarding the estate from a metaphorical dumpster fire to a debtor-in possession approaching a confirmed plan of reorganization that will return substantial value to creditors, I can assure the Court that each of these statements is categorically, callously, and demonstrably false,” Ray said.
He said some of what was lost was recovered by a team of professionals working tens of thousands of hours “digging through the rubble of Mr. Bankman-Fried’s sprawling criminal enterprise to unearth every possible dollar, token or other asset that was spent on luxury homes, private jets, overpriced speculative ventures, and otherwise lost to the four winds.”
At the trial, prosecutors told the jury that Bankman-Fried had stolen more than $10 billion of money from customers, lenders and investors. They have asked that he be sentenced to a prison term of 40 to 50 years.
Bankman-Fried's lawyer has requested a prison term in the single digits, relying in part on claims that those who lost money will be reimbursed.
But Ray said customers will never be fully made whole, despite Bankman-Fried's claims that a Jan. 31 bankruptcy court hearing shows that customers and creditors will get all their money back.
Ray said many of Bankman-Fried's victims are “extremely unhappy” to learn that the Bankruptcy Code dictates that each claim must be valued as of Nov. 11, 2022, when the value of cryptocurrencies was 400 percent lower than today. And, he added, their plight was made worse by incorrect financial statements sent to them when Bankman-Fried was in charge.
The victims also will not get back money that can't be recovered, like $150 million in bribes that prosecutors say were paid to Chinese government officials or nearly 100,000 bitcoins listed on customer statements even though only 105 bitcoins were left on the FTX.com exchange, he said.
Also lost was 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 wrote. “The harm was vast. The remorse is nonexistent. Effective altruism, at least as lived by Samuel Bankman-Fried, was a lie.”
He added: “FTX was run for its very short existence by Mr. Bankman-Fried with hubris, arrogance, and a complete lack of respect for the basic norms of the law, which is all the more inexcusable given his privileged upbringing.”
A lawyer for Bankman-Fried did not immediately comment on Ray's letter.
But in a letter to the judge Wednesday, attorney Marc Mukasey said that a March 5 letter from debtors to the bankruptcy court indicated that “it appears more and more likely that FTX investors may be in position to recover 100 percent of their claims in the bankruptcy.”