Sam Bankman-Fried on Tuesday posted on X that FTX was “never bankrupt,” alleging lawyers filed a bogus bankruptcy four hours after taking control to siphon funds, despite court findings of an $8 billion customer gap that led to his 25-year fraud sentence.
The Bombshell Claims
Bankman-Fried claimed he never personally filed for bankruptcy and blamed Sullivan & Cromwell lawyers for the Chapter 11 filing.
The post referenced court documents alleging a former FTX.US executive argued the U.S. entity shouldn’t have been included in bankruptcy since its wallets weren’t affected by FTX International’s customer deficit.
According to the filing, Mr. Miller insisted on including FTX.US because it had cash needed to pay Sullivan & Cromwell’s retainer fee.
The documents claim Miller said Sullivan & Cromwell placed “S&C’s guy” to manage all FTX companies and planned to direct over $200 million in cash from LedgerX subsidiary to the law firm, making legal costs a “non-issue.”
The Reality Check
Court records and regulatory complaints describe FTX as deeply insolvent once the hidden deficit at sister trading firm Alameda Research was exposed in late 2022.
Judges and prosecutors found Bankman-Fried siphoned more than $8 billion in customer assets.
Even as recoveries improved, judges have been explicit: solvency after a market rebound doesn’t erase prior fraud.
Post-collapse asset recoveries and the crypto bull market boosted estimated creditor recoveries above par in some scenarios, but this doesn’t change the insolvency at the time of collapse.
The Broader Defense
Bankman-Fried’s post responded to crypto commentator Alex Wice, who argued the FTX trial was unfair.
Wice claimed Judge Kaplan prevented Bankman-Fried from presenting key evidence including that he “relied on lawyers,” customers would get paid back, and FTX’s terms allowed margin lending risks.
Wice’s argument: Only a “tiny fraction” of money was actually missing at the time, probably from Alameda’s blowup within the margin lending system after markets crashed.
He suggested if Bankman-Fried hadn’t signed bankruptcy, FTX customers would have been paid faster.
Image: Shutterstock
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