Did FTX Lose $138 Billion Because of Its Legal Team?

Disgraced FTX founder Sam Bankman-Fried (SBF) has claimed in a new report that his bankrupt cryptocurrency empire was never insolvent. He alleged that bankruptcy lawyers, not fraud, are to blame for the collapse that shook global crypto markets in 2022.

The report drew sharp responses from blockchain investigators quickly. Crypto sleuth ZachXBT accused SBF of misleading people again and trying to shift blame.

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Behind The FTX Collapse

The report, titled “FTX: Where Did The Money Go?,” by Bankman-Fried and his team, was posted on X (formerly Twitter). In the report, he outlined how $20 billion from seven million FTX customers turned into $8 billion in debt during the November 2022 collapse.

Bankman-Fried stressed that the exchange allegedly had around $15 billion in assets at the time. He cites internal filings from FTX’s 2023 presentation to creditors, which listed assets that included crypto holdings, venture investments, and real estate.

The report noted that, after a two-year delay, the estate revealed that all customers would be repaid at 119% to 143% of the original amount. SBF added that about 98% of creditors have already received 120%, and that after paying out $8 billion in claims and $1 billion in legal fees, the estate still has $8 billion left. He presents this outcome as proof that FTX always had enough assets to make customers whole.

However, the report also acknowledged ongoing criticism that repayments are being made in US dollar equivalents based on November 2022 prices, not in-kind crypto. That means customers who held Bitcoin or Ethereum at the time are receiving far less than the current market value.

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SBF Blames The Legal Team For FTX’s Downfall

Bankman-Fried also laid the collapse squarely at the feet of FTX’s legal advisors. The report blames Sullivan & Cromwell (S&C), the law firm that handled FTX’s bankruptcy, and John J. Ray III, who replaced him as FTX’s CEO after the collapse.

He accused the firm of “seizing control” of the exchange in November 2022 and filing for bankruptcy, even though he claims the company was solvent.

According to Bankman-Fried, S&C, and Ray acted out of self-interest. They sought control over FTX’s billions in assets in order to collect large professional fees. He cites court filings showing that the bankruptcy process has already cost around $1 billion in legal and consultancy fees.

The document also claims that within hours of taking over, Ray dismissed key FTX staff who understood the company’s systems and declared the company “hopelessly insolvent.”

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Bankman-Fried argues that if the exchange had continued operating, FTX’s assets — including holdings in Solana, Robinhood, Anthropic, and Sui — would have been worth about $136 billion today. Instead, he alleges, the bankruptcy team sold these assets at “fire-sale” prices, wiping out more than $120 billion in potential value.

Among the examples he lists:

• FTX’s stake in Anthropic, an AI startup now valued at $183 billion, was sold for less than $1 billion.
• The team sold the company’s Robinhood shares for roughly $600 million but would be worth more than $7 billion today.
• They also offloaded about 58 million Solana tokens for $3.3 billion — less than half their current estimated value.

The report further claims that the estate “discarded” FTT, FTX’s native token, labeling it worthless. Nonetheless, it still trades with a market capitalization above $300 million.

By Bankman-Fried’s calculations, these sales, combined with government settlements and professional fees, amounted to $138 billion in lost value — money he insists could have gone to customers and equity investors.

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The report paints a vastly different picture from the narrative presented at Bankman-Fried’s 2023 criminal trial. The court convicted him of fraud and sentenced him to 25 years in prison.

Crypto Investigator Accuses SBF of Twisting Facts

Meanwhile, the crypto community did not receive Bankman-Fried’s latest remarks well. In a reply, prominent blockchain investigator ZachXBT wrote:

The sleuth also argued that the former FTX CEO was exploiting the fact that nearly every FTX-related asset and investment has surged in value since the market’s lowest point in November 2022.

He noted that this rebound doesn’t change the reality that, at the time of the bankruptcy, FTX lacked the liquidity to fulfill customer withdrawals. According to him, Bankman-Fried is attempting to shift blame.