The founder of the collapsed crypto empire FTX Sam-Bankman Fried (SBF), again claims that the FTX US was and is solvent as it has “hundreds of millions of dollars in excess of customer balances.“
In a Substack post on Tuesday, January 17th, Sam Bankman-Fried (SBF) refuted some claims made by the company’s lawyers, Sullivan & Cromwell (S&C), in a presentation S&C formally filed in the Delaware Chapter 11 court docket. In the filing, S&C claims that FTX has shortfalls at both International and U.S. Exchanges.
— SBF (@SBF_FTX) January 18, 2023
FTX US Was Always Solvent
FTX debtors also held a meeting on Tuesday before Sullivan & Cromwell (S&C) filed the presentation to the Delaware bankruptcy court. In a press release, FTX debtors confirmed the data compiled in the presentation.
According to the presentation, FTX US and FTX.com were insolvent even before the bankruptcy filing on November 11th, as there was a substantial shortfall of digital assets at both exchanges.
FTX Debtors claims they have identified approximately $5.5 billion of liquid assets. They comprised $1.7 billion of cash, $3.5 billion of liquid crypto assets &FTT tokens, and $0.3 billion of securities.
As of the petition date, the debtors have identified approximately $1.6 billion in digital assets at FTX.com and $181 million at FTX US. However,
“the assets identified as of the Petition Date are substantially less than the aggregate third-party customer balances suggested by the electronic ledger” at both exchanges.”
On November 10th, 2022, the FTX balance sheet showed a customer balance of $497 million. S&C’s balance sheet for FTX on November 11th showed a customer balance of more than $181 million.
According to SBF, the petition date for FTX US is November 14th, 2022, instead of November 11th, which is the petition date for most other entities. Furthermore, they are calculating the amount after the hack on the night of November 11th and massive withdrawals. This is the reason for the shortfall S&C figured at the FTX US, considering November 11th as the petition date.
He said it was a basic mistake as they did not consider the bank balance. He said:
“They claim there were “$181m of digital assets” on November 11th. As of November 11th, FTX US Derivatives (LedgerX) had $250m in a segregated bank account, meant to eventually be used as regulatory capital if the futures margin proposal were to be approved. $250m > $181m, so we can prove that the $181m does not include bank balances.”
Summarizing his remarks, SBF said that the FTX had $428 million in bank accounts plus $181 million worth of tokens, totaling roughly $609 million. This amount fully covers the $199 million customers’ assets with $400 million to spare.
“FTX US was solvent when it was turned over to S&C and almost certainly remains solvent today.”