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Key Takeaways
- John J. Ray III contradicts founder Sam Bankman-Fried, asserting that FTX’s collapse did cause financial harm to stakeholders.
- Ray points out that full financial recovery for creditors and investors is impossible, with repayments based on the depreciated values at the time of FTX’s bankruptcy filing.
- Highlighting the extensive work to salvage assets, Ray insists this effort doesn’t clear Bankman-Fried of criminal responsibility.
John J. Ray III, the current CEO of the crypto exchange FTX, opposes the founder Sam “SBF” Bankman-Fried’s assertions regarding the crypto exchange’s 2022 downfall.
In a detailed victim impact statement submitted to the New York District Court, Ray provides a stark counter-narrative to SBF’s earlier optimistic portrayal of the situation.
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In a plea to reduce his prison sentence, Bankman-Fried claimed that the actual “harm to customers, lenders, and investors is zero,” as they will be repaid in full.
Ray argues that even in the best outcome, creditors and non-insider investors will not fully recoup their losses as if the fraud had not happened.
That is because claims are valued as of the bankruptcy filing date, meaning someone with Bitcoin (BTC) on FTX as of November 2022 will be paid based on its value then, nearly four times lower than today’s.
He further added that repayments based on today’s values would not have been possible, as upon his takeover, FTX was left with only 105 Bitcoins “against customer entitlements of nearly 100,000 Bitcoins.”
Ray makes it clear that the eventual ability to compensate customers does not absolve SBF of criminal responsibility. He states:
The value we hope to return to creditors would not exist without the tens of thousands of hours that dedicated professionals have spent digging through the rubble of Mr. Bankman-Fried’s sprawling criminal enterprise to unearth every possible dollar, token or other asset.
Ray firmly positions the FTX debacle within the broader financial integrity and accountability discourse. He stresses that the fundamental harms and ethical breaches cannot be overlooked despite the optimistic outlook on asset recovery.
Sam Bankman-Fried’s sentencing is set for March 28. As the day approaches, the unfolding FTX saga is a cautionary tale for the crypto industry, underscoring the need for transparency, ethical conduct, and rigorous oversight.
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.
With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.
Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.
Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.
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