FTX Was Never Really Bankrupt
The prosecution in Sam Bankman-Fried’s criminal trial drilled into the jurors’ heads that FTX customer losses exceeded $8 billion, but never substantiated that claim. In reality, the crypto exchange had sufficient assets to make creditors whole all along – a fact that would likely change the public’s perception of its founder.
NEW HAVEN/STANFORD – Last November, FTX founder Sam Bankman-Fried’s closely watched criminal trial ended with his conviction on seven counts of fraud and conspiracy. According to the prosecution, Bankman-Fried stole “billions of dollars” from the crypto exchange’s customers “out of sheer greed.”
One key issue was how much money FTX’s customers lost. During the trial, the prosecution and its witnesses repeatedly – in fact, 97 times – put that number at $8 billion. Although no proof to substantiate this massive figure was ever offered, the prosecution clearly wanted it to stay in jury members’ heads.
In fact, the figure is misleading. Instead of measuring loss, the $8 billion reflects the temporary shortfall in cash and other liquid assets needed to cover FTX customers’ remaining redemption requests after FTX’s chief competitor triggered a run on the exchange in November 2022.