From Prison, Sam Bankman-Fried Says FTX Was Never Bankrupt

Key Takeaways:

• Sam Bankman-Fried announced in prison that FTX has never been bankrupt and he has not approved the filing for bankruptcy according to Chapter 11.
• He accused external lawyers who submitted a “bogus” document to take control of the exchange.
• These statements conflict with the court’s judgement ruling billions of dollars of customers losing.

Sam Bankman-Fried is now back in the crypto news coverage, with fresh in-prison assertions that FTX was never bankrupt and shifting the responsibility of the exchange to collapse to lawyers who seized control in November 2022.

SBF Denies Bankruptcy Filing from Prison

In one of his recent remarks that he has posted through his X account, Bankman Fried did not declare himself to have ever declared bankruptcy on behalf of FTX. In his opinion, legal advisers took over the company and put it into Chapter 11 just a few hours later without his consent.

He described the filing as illegitimate and claimed it was used to drain value from the estate through legal fees. Bankman-Fried insists FTX was still operational at the time and argues that the bankruptcy process itself caused long-term damage to customers and the platform.

Because U.S. federal inmates are not allowed unrestricted access to social media, the posts are believed to have been relayed through intermediaries, such as legal counsel or associates.

Read More: FTX Quietly Stakes $79M in Ethereum

Claims of Solvency and Liquidity Stress

Bankman-Fried’s core argument is that FTX faced a short-term liquidity crisis rather than insolvency. According to him, the exchange had sufficient assets to fulfill the obligation of the customers, and the issues became serious only when the withdrawals increased.

He has several times cited crypto holdings, such as holding holdings of large token balances, as being evidence that had time FTX could have remained afloat. To him, a well-organized winding down or further operation would have implied more skilled customer repayments.

Disputed Trial Narrative

Bankman -Fried and proponents believe that they had important evidence omitted to be used in the trial. They allege that the court restricted debate on solvency, the expectation of repayment of customers and dependence on legal advice. These arguments are disallowed by critics who point out that the fraud charges were not based on the balance-sheet snapshots alone, but misuse of funds and intent.

Read More: U.S. Demands 12-Year Prison Term for Do Kwon After $40B Terra Crash Shook Crypto Markets

Court Findings and the $8 Billion Gap

The prosecutors of the U.S. demonstrated evidence that FTX used customer deposits inappropriately, transferring them to the Alameda Research, which resulted in the formation of an approximate shortage of 8 billion dollars. Bankman -Fried was found guilty of seven fraud and conspiracy counts by a jury, which resulted in serving a 25-year prison term.

Court documents reported that FTX was highly insolvent after suppressed liabilities emerged. Although the bankruptcy estate has since recouped significant assets and creditors do anticipate receiving close to 100 percent back through future recoveries, judges have said that future recoveries do not alter the character of preceding wrongdoing.

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