Sam Bankman-Fried, the founder of the bankrupt crypto exchange FTX, stated in an exclusive interview from prison that his biggest mistake was handing over control to current CEO John J. Ray III on November 11, 2022. Bankman-Fried claimed that minutes after signing the transfer documents, he received a call about an external investment that could have plugged the $8 billion hole in FTX's balance sheet, but it was too late as Ray filed for Chapter 11 bankruptcy that same day.
Bankman-Fried, serving a 25-year prison sentence after being convicted on seven felony counts including wire fraud and money laundering, maintains his innocence, saying, "I didn't defraud anyone." He criticized the prison conditions humorously, noting restrictions like only wearing overalls from 6 a.m. to 3 p.m. His parents, Stanford University law professor Joe Bankman and Barbara Fried, are part of his defense team and are preparing an appeal, with Fried expressing outrage over his imprisonment.
The FTX collapse, triggered by a CoinDesk report revealing that Alameda Research heavily relied on FTX's own token, FTT, led to a loss of investor confidence and massive withdrawals. Prosecutors identified an "Alameda gap" where billions in client funds were misused. The law firm Sullivan & Cromwell, which recommended Ray and handled the bankruptcy, earned over $171 million in fees by June 2024, according to court filings.
Despite the collapse, the FTX estate has made significant repayments to creditors, returning $7.8 billion out of $16.5 billion in recovered assets, with plans to repay 118% of the value owed to 98% of customers as of November 2022. John J. Ray III countered SBF's claims, describing FTX under Bankman-Fried as a "house of cards" and asserting that his actions saved customer money. The FTX meltdown caused Bitcoin to plunge to near $16,000 and triggered widespread industry failures.
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