He becomes with each passing day one of the biggest problems for John Ray, the liquidator of his crypto empire.
Sam Bankman-Fried, the former king of crypto, seems to have decided not to make it easy for those in charge of bankruptcy proceedings at the FTX exchange and its sister company Alameda Research, a hedge fund that was also a trading platform.
FTX and Alameda were the two heads of 30-year-old Bankman-Fried's cryptocurrency empire. The two companies went bankrupt on November 11 because they could no longer meet the massive demands for withdrawals of funds by their customers.
FTX, whose headquarters was in the Bahamas had an American subsidiary FTX US. The latter also filed for bankruptcy like many other subsidiaries of the Bankman-Fried galaxy.
Shortfalls Discovered in U.S and Elsewhere
Since this rout which completely shook the crypto industry, Bankman-Fried has continued to claim that FTX US was solvent and should never have filed for bankruptcy.
He has thus just challenged once again the declarations of the lawyers representing FTX. These lawyers from the Sullivan & Cromwell firm declared on January 17 that FTX US had cryptocurrencies worth $181 million at the time of the bankruptcy, which would not be enough to repay all the customers and investors who lost their money at the time of bankruptcy.
"Investigation has confirmed shortfalls at both International and U.S. Exchanges," lawyers from Sullivan & Cromwell said in a presentation to the company’s committee of unsecured creditors.
Ray's team said it took a "Herculean investigative effort," to recover that $181 million worth of cryptocurrency. They explained that half of those assets were drained from wallets in "unauthorized transfers" following FTX filing for Chapter 11 bankruptcy on November 11.
But Bankman-Fried, who is currently under house arrest, disputes those numbers. He just repeated once again that FTX US was solvent.
"These claims by S&C are wrong, and contradicted by data later on in the same document," the former trader said on a blog post on Substack, referring to Sullivan & Cromwell. "FTX US was and is solvent, likely with hundreds of millions of dollars in excess of customer balances."
$428 Million in Cash Claimed
Bankman-Fried says FTX lawyers failed to include $428 million in cash held by FTX in their calculations.
"S&C failed to include $428m in FTX US’s bank accounts as an asset: $181m of digital assets, not including $428m USD in banks; more than $181m of customer balances, including USD; thus, they concluded that FTX US had a 'shortfall'."
The former trader seems to refer to a “Confirmed Cash” table attributing $428 million to the West Realm Shires silo, which was the parent company of FTX US, LedgerX, FTX Capital Markets and Embed Clearing.
The question, however, is whether Bankman-Fried sees West Realm Shires silo's cash as belonging only to one company, FTX US.
On November 10, the day before the bankruptcy of FTX and its entities, Bankman-Fried already repeated that FTX US, a platform where investors living in the United States could buy and sell cryptocurrencies from FTX, was not impacted by the difficulties of the parent company.
"FTX US, the US based exchange that accepts Americans, was not financially impacted by this shitshow," the former crypto king wrote. "It's 100% liquid. Every user could fully withdraw."
Bankman-Fried faces a series of criminal and civil charges, including alleged fraud.
His trial is scheduled for October.
Bankman-Fried was released on bail on Dec. 21 after being extradited from the Bahamas where he lived. He has pleaded not guilty on Jan. 3 during a hearing in New York.