Law firm Sullivan & Cromwell has contradicted itself by claiming that shuttered cryptocurrency exchange FTX.US is insolvent, according to former CEO Sam Bankman-Fried (also known as “SBF”) in a January 17 blog post that was shared on Twitter.
FTX US is solvent, as it always as been. https://t.co/XjcyYFsoU0 pic.twitter.com/kn9Wm9wxjl
—SBF (@SBF_FTX) January 18, 2023
The law firm was retained by the FTX Group to manage bankruptcy proceedings for several of its affiliates, including FTX International, Alameda Research, and FTX.US. Nevertheless, Sam Bankman-Fried has stated on several occasions that he believes FTX.US is solvent and should not have filed for bankruptcy.
In a statement filed with the United States Bankruptcy Court for the District of Delaware on January 17, Sullivan and Cromwell reiterated its assertion that FTX.US is not creditworthy, stating: “The assets identified as of the date of the petition are substantially less than the aggregate balances of third-party customers suggested by the FTX.US electronic ledger.”
In his post, Bankman-Fried denied this claim, stating that the law firm has contradicted itself:
“Later in the same report, S&C reveals that FTX US has an additional $428 million in bank accounts, on top of the $181 million of tokens, which is about $609 million of total assets. […] therefore, FTX US had at least $111 million, and probably around $400 million, of excess cash in addition to what was required to match customer balances.”
The former CEO concluded that “FTX.US is solvent. Clients must have access to their funds.”
Bankman-Fried stepped down as CEO of FTX on November 11, 2022, and John J. Ray III was named the company’s replacement CEO. On December 13, Bankman-Friend was charged with fraud by the US Securities and Exchange Commission in connection with the bankruptcy of FTX. The SEC alleged that it “orchestrated a years-long fraud to hide FTX investors from […] the undisclosed diversion of FTX client funds to Alameda Research LLC, its private cryptocurrency hedge fund.” He has pleaded not guilty and is currently awaiting trial.
After being released on bail, Bankman-Fried began posting his blog posts on substack on January 12, but many in the cryptocurrency community have been unimpressed with his writing.
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