Sam Bankman-Fried is once more difficult the core narrative of his downfall: that FTX was bancrupt when it collapsed in November 2022.

In a 15-page report written from jail and dated Sept. 30, the convicted founder claimed the trade “was by no means bancrupt” however merely trapped in a “liquidity disaster” after clients pulled $5 billion in two days.

He argued that FTX and its buying and selling arm, Alameda Analysis, collectively held $25 billion in property and $16 billion in fairness worth towards about $13 billion in liabilities. In accordance with him, his companies had sufficient to repay clients in full if the corporate had been allowed to proceed working.

He wrote:

“FTX at all times had ample property to repay all clients, in sort, and supply vital worth to fairness holders as effectively. That’s what would have occurred if attorneys hadn’t taken over FTX.”

As an alternative, Bankman-Fried blames outdoors counsel and new CEO John J. Ray III for pushing FTX into Chapter 11 earlier than rescue financing may very well be accomplished.

His framing of FTX’s problem as a liquidity drawback, relatively than insolvency, serves to melt allegations of fraud and redirects blame towards the authorized staff that froze operations.

If accepted, it transforms the implosion from one in all misused deposits right into a fixable financial institution run minimize quick by overzealous attorneys.

Solvency by hindsight

In his report, Bankman-Fried treats FTX’s frozen portfolio as if it had survived intact by way of the whole 2023–25 market restoration.

He reprices the bankrupt agency’s holdings in Solana, Robinhood, Sui, Anthropic, and even the now-worthless FTT token at present values, suggesting that by the tip of this yr, the basket can be price roughly $136 billion. This might simply cowl the $25 billion he cites in buyer and creditor claims.

From there, he insists, everybody may have been paid “in full, in sort,” and fairness buyers would nonetheless have walked away with billions.

Nevertheless, that reasoning is flawed as it’s “solvency by bull market.”

Chapter regulation doesn’t permit a failed firm to maintain buying and selling for years within the hope that rising costs will restore its steadiness sheet. As soon as Chapter 11 is filed, claims are frozen on the petition date, transformed to {dollars}, and pursued by way of restoration, not hypothesis.

As former FTX basic counsel Ryne Miller identified:

“That week in November 2022, property readily available had been nothing close to satisfactory, and the founders had been fabricating asset lists (and desperately chasing new buyers). The cash had been gone, people. Your cash had been gone. That’s why chapter occurred.”

Because of this a lot of FTX’s portfolio was constructed with commingled buyer funds. No courtroom would have permitted these property to stay in danger whereas administration gambled on a rebound.

Bankman-Fried’s math solely works if regulators and collectors had let an trade underneath prison and liquidity stress preserve working usually for 2 extra years, a situation that borders on fantasy.

The FTX reboot that by no means occurred

The identical optimism underlies his declare that FTX was “shut down too early.”

Bankman-Fried insists the trade was nonetheless incomes about $3 million a day and practically $1 billion a yr when Ray halted operations. He additionally maintains that administration had recognized $6 billion to $8 billion in emergency financing that might have closed the opening “by the tip of November 2022.”

That line of argument assumes FTX remained a going concern, that buying and selling would have continued, clients would have stayed, and the enterprise portfolio may have prevented fire-sale reductions.

However by mid-November, the trade confronted a whole collapse of confidence. Counterparties had been fleeing, licenses had been suspended, and regulation enforcement businesses had been circling. Below these circumstances, retaining FTX stay would have risked deeper losses and regulatory backlash.

Nevertheless, business consultants famous that the chapter property selected the safer route of freezing accounts, preserving what remained, and pursuing orderly asset restoration underneath courtroom supervision.

In reality, Miller advised that the chapter property’s determination helped salvage some worth, relatively than destroying it.

In accordance with him, the property’s disciplined administration of FTX’s Solana and Anthropic stakes, each of which appreciated sharply within the restoration,  turned one of many predominant causes collectors could now be made complete.

Because of this Bankman-Fried’s portrait of a worthwhile agency unfairly shuttered by attorneys overlooks these realities. His assumptions about ongoing income and investor confidence belong to a world that not exists as soon as belief evaporates.

Competing timelines, competing truths

At its core, the dispute facilities on which timeline defines the corporate’s actuality.

Bankman-Fried measures solvency by 2025 asset costs and a enterprise that by no means closed. The chapter property measures it by what remained in November 2022.

On the property’s timeline, FTX confronted an $8 billion gap, property had been illiquid or overstated, and recent funding efforts had stalled. Freezing operations and changing claims to {dollars} had been the one honest course.

On Bankman-Fried’s timeline, the act of intervention prompted the harm as attorneys “commandeered” the corporate, offered property right into a rising market, incurred practically $1 billion in charges, and “destroyed” over $120 billion in hypothetical upside.

That inversion turns the cleanup into the offender. It reframes a regular court-supervised wind-down as a hostile takeover that allegedly vaporized future worth.

But the central reality stays unchanged: when clients demanded their cash, FTX was unable to pay. The whole lot else is retroactive storytelling.

As blockchain investigator ZachXBT frames it:

“SBF is simply attempting to weaponize the truth that each FTX asset / funding has gone up from picobottom Nov 2022 costs after they factually couldn’t pay out customers on the time of chapter and as an alternative level the chapter staff because the true villain.”