Government
exhibit
in
the
case
against
former
FTX
CEO
Sam
Bankman-Fried.

Source:
SDNY

As
Sam
Bankman-Fried
prepares
to
face
sentencing
next
month
for
his
criminal
fraud
conviction
tied
to
the
epic

collapse
of
FTX

in
2022,
former
customers
of
the
crypto
exchange
have
reasons
to
believe
they
could
actually
recoup
their
money.

Bankman-Fried,
who
could
spend
the
rest
of
his
life
behind
bars,
was

found
guilty

in
November
on
seven
criminal
counts
after
roughly
$10
billion
in
customer
funds
from
his
company
went
missing.
Some
of
that
money
went
to
pay
for
Bankman-Fried’s
lavish
lifestyle,
but
much
of
it
went
towards
other
investments
that
have,
of
late,
appreciated
dramatically
in
value.

Lawyers
representing
the
bankruptcy
estate
of
FTX
told
a
judge
in
Delaware
last
week
that
they
expect
to
fully
repay
customers
and
creditors
with
legitimate
claims.
Bankruptcy
attorney
Andrew
Dietderich,
who
works
with
FTX’s
new
leadership
team,
said
“there
is
still
a
great
amount
of
work
and
risk”
ahead
in
getting
all
the
money
back
to
clients,
but
that
the
team
has
a
“strategy
to
achieve
it.”

It’s
a
welcome
development
for
the
many
thousands
of
customers
(reportedly
up
to
a
million)
who
collectively
lost
billions
of
dollars
in
FTX’s
collapse
15
months
ago,
when
the
crypto
exchange
spiraled
into
bankruptcy
in
a
matter
of
days.
Given
the
lightly
regulated
and
unsecured
nature
of
FTX

and
the
crypto
industry
at
large

those
clients
faced
the
real
possibility
that
the
vast
majority
of
their
money
had
evaporated.
Plenty
of
failed
hedge
funds
and
lenders
lost
virtually
everything
during
the
2022

crypto
winter
.

Bankman-Fried
never
believed
his
company’s
situation
was
that
dire.

Even
as
regulators
and
federal
prosecutors
unearthed
evidence
showing
that
the
31-year-old
entrepreneur
and
his
top
lieutenants
had
been
pilfering
billions
of
dollars
from
customer
wallets
for
years,
Bankman-Fried
insisted
that
all
the
money
was
still
somehow
accessible.

“FTX
US
remains
fully
solvent,”

Bankman-Fried
wrote
in
a
Substack
post
on
Jan.
12,
2023
,
while
he
was
under
house
arrest
at
his
parents’
home
in
Palo
Alto,
California.
He
said
the
exchange
“should
be
able
to
return
all
customers’
funds.”

In
some
ways,
his
narrative
appears
to
be
proving
true.

Joseph
Bankman
and
Barbara
Fried
arrive
for
the
trial
of
their
son,
former
FTX
Chief
Executive
Sam
Bankman-Fried,
who
is
facing
fraud
charges
over
the
collapse
of
the
bankrupt
cryptocurrency
exchange,
at
Federal
Court
in
New
York
City,
U.S.,
October
26,
2023. 

Brendan
Mcdermid
|
Reuters

For
months,
FTX’s
new
CEO,
John
Ray
III,
and
his
team
of
restructuring
advisors
have
been
clawing
back
cash,
luxury
property,
and
crypto,
as
well
as
tracking
down
missing
assets.
They’ve
already
collected
more
than
$7
billion,
and
that
doesn’t
include
valuables
like
$26
million
in
gifts
and
property

to
Bankman-Fried’s
parents
,
or
the

$700
million
handed
over
to
K5
Global
and
founder
Michael
Kives
,
who
invested
FTX
cash
in
companies
like
SpaceX.
Some
of
those
investments
have
seen
a
precipitous
rise
in
value.

FTX
had
been
negotiating
with
bidders
about
a
potential
reboot
of
the
company,
but
those
efforts
were

scrapped

last
month.

Braden
Perry,
who
was
once
a
senior
trial
lawyer
for
the
Commodity
Futures
Trading
Commission,
FTX’s
only
official
U.S.
regulator,
told
CNBC
that
the
decision
to
repay
users
in
full
came
after

the
abandonment
of
efforts
to
restart
the
FTX
crypto
exchange,”
in
favor
of
“a
focus
on
liquidating
assets
to
make
customers
whol​e.”

Getting
actual
money
back
in
the
hands
of
customers
still
remains
a
challenge.
While
a
lot
of
the
value
has
been
recouped
and
more
is
to
come,
divvying
up
large
amounts
of
cash
is
a
complex
process
in
bankruptcies,
particularly
when
so
much
of
the
money
is
in
non-traditional
and
illiquid
assets.

Even
Ray
was
doubtful
at
the
beginning
of
the
process,
noting
in
late
2022
that,
“At
the
end
of
the
day,
we’re
not
going
to
be
able
to
recover
all
the
losses
here.” 


‘Sam
coins’
soar

What
Ray
wasn’t
banking
on
was
a
huge
market
rebound.
When
he
made
those
remarks,
crypto
was
mired
in
a
bear
market,
with


bitcoin

trading
at
around
$16,000.
It’s
now
above
$47,000.

In
September,
the
bankruptcy
team

released
a
status
report

showing
that
FTX
had
$3.4
billion
worth
of
digital
assets,
with
over
$1.1
billion
coming
from
its


Solana

investment.

Solana
fits
into
a
category
of
so-called
“Sam
coins,”
a
group
that
also
includes
Serum,
a
token
created
and
promoted
by
FTX
and
sister
hedge
fund
Alameda
Research.
After
the
dust
settled
from
FTX’s
bankruptcy,
Solana
saw
a
huge
run-up
in
its
price,
and
it
continued
to
rally
after
the
September
report.
Since
the
end
of
that
month,
it’s
spiked
fivefold.

Meanwhile,
FTX’s
bitcoin
stash,
which
was
worth
$560
million
at
the
time
of
the
September
report,
is
today
valued
north
of
$1
billion.

Bankman-Fried’s
investments
weren’t
limited
to
crypto.
He
also
used
client
money
to
back
startups
like
Anthropic,
the
artificial
intelligence
company
founded
by
ex-OpenAI
employees.
FTX
invested
$500
million
in
Anthropic
in
2021,
before
the
generative
AI
boom.
Anthropic’s
valuation
hit

$18
billion
 in
December
2023,
which
would
value
FTX’s
roughly
8%
stake
at
about
$1.4
billion.

During
Bankman-Fried’s
criminal
trial
in
New
York,
Judge
Lewis
Kaplan
denied
the
defense’s
request
that
it
be
permitted
to
say
that
FTX’s
investment
in
Anthropic
was
a
smart
bet.
The
bankruptcy
estate
of
FTX
has
been
looking
to
sell
its
Anthropic
stake,
according
to
a
court
filing
this
month.

Sam
Bankman-Fried
stands
as
forewoman
reads
the
verdict
to
the
court.

Artist:
Elizabeth
Williams

In
his
biography
on
Bankman-Fried
titled
“Going
Infinite,”
Michael
Lewis
said
he
was
told
by
an
investor
interested
in
bidding
for
the
venture
portfolio
that
“if
it
was
sold
intelligently,
it
should
go
for
at
least
$2
billion.”
Lewis,
who
published
his
book
late
last
year,
wrote
that,
based
on
his
back-of-the-envelope
math,
the
$7.3
billion
that
Ray’s
team
had
come
up
with
didn’t
include
Serum,
some
large
clawbacks
and
other
venture
investments
that
had
appreciated
in
value.

For
FTX
customers,
being
made
whole,
according
to
a
judge’s
ruling,
means
getting
the
cash
equivalent
of
what
their
crypto
was
worth
in
November
2022.
In
other
words,
they’re
not
seeing
any
of
the
upside
of
FTX’s
investments
or
being
given
virtual
coins
that
would
allow
them
to
cash
out
at
higher
valuations.

Still,
some
investors
have
found
a
way
to
participate
in
the
FTX’s
ongoing
odyssey.

The
market
for
FTX
IOUs
lit
up
last
year

as
it
became
clear
that
the
bankruptcy
estate
was
cobbling
together
a
lucrative
portfolio.
One
financial
firm
that
had
lost
around
$100
million
initially
sold
its
FTX
debt
for
6
cents
on
the
dollar
in
a
new
secondary
market
out
of
concern
that
he
may
never
get
a
better
deal.
As
of
December,
those
claims
were
going
for
more
than
70
cents
on
the
dollar.

If
customers
are
eventually
made
whole,
that
could
play
a
big
role
in
Bankman-Fried’s
appeal,
likely
following
his
sentencing,
which
is
set
to
take
place
in
Brooklyn
on
March
28.
Perry
said
it
could
also
affect
how
the
judge
handles
sentencing
in
the
first
place.

“Under
the
federal
sentencing
guidelines,
and
even
assuming
no
monetary
loss,
SBF
still
faces
at
least
70
months
in
prison
based
on
his
base
level
offense,
number
of
victims,
sophisticated
means,
and
leadership
role,”
Perry
said.

The
massive
losses
that
were
originally
expected
would
suggest
30
to
years
to
life,
Perry
added.

Renato
Mariotti,
a
former
prosecutor
in
the
U.S.
Justice
Department’s
Securities
and
Commodities
Fraud
Section,
told
CNBC
that
judges
typically
consider
the
amount
of
restitution
paid
to
victims
at
sentencing.

“If
the
victim
is
made
whole,
that
is
a
big
plus
for
the
defendant,”
said
Mariotti.
He
noted,
however,
that
the
extent
of
the
fraud
coupled
with
Bankman-Fried’s
false
testimony
and
violation
of
bond
conditions
could
limit
the
reduction.

“I
usually
advise
clients
to
pay
restitution
before
sentencing
if
at
all
possible,”
Mariotti
said.


WATCH:


Former
SEC
Chari
discusses
Bankman-Fried
guilty
verdict

Fmr. SEC Chair Jay Clayton: SBF trial is 'one of the largest campaign finance problems in history'


watch
now