Sam Bankman Fried is once again contesting the central narrative of his downfall: that FTX became insolvent when it collapsed in November 2022.
In a 15-page report written from prison and dated September 30, the convicted founder claimed that the exchange was “never insolvent” but was simply in a “liquidity crisis” after customers withdrew $5 billion in two days.
He claimed that FTX and its trading arm, Alameda Research, have combined assets of $25 billion, shareholder value of $16 billion and debt of approximately $13 billion. He said his company had enough funds to repay customers in full if it had been allowed to continue operating.
He wrote:
“FTX has always had sufficient assets to repay all of its customers in kind and was able to provide significant value to its stockholders as well. That would have happened if the lawyers had not taken over FTX.”
Rather, Bankman Freed blames outside counsel and new CEO John J. Ray III for pushing FTX into Chapter 11 before the rescue loan was completed.
His framing of FTX’s problems as a liquidity problem, rather than a bankruptcy, has helped allay fraud allegations and shift blame to the legal team that froze the business.
If this is accepted, the implosion of misappropriated deposits turns into a salvageable mount that was terminated by overzealous lawyers.
Ability to pay in hindsight
In his report, Bankman Fried treats the frozen FTX portfolio as if it had survived the entire 2023-2025 market recovery period intact.
He has repriced Solana, Robinhood, Sui, Anthropic and even worthless FTT tokens held by bankrupt companies at their current value, suggesting the basket could be worth about $136 billion by the end of this year. That could easily cover the $25 billion he cited as a bill from customers and creditors.
From there, everyone could have been paid “in full, in kind,” and equity investors would still have taken home billions of dollars, he argues.
However, this reasoning is flawed in terms of “bull market solvency.”
Bankruptcy laws do not allow failed companies to continue trading for years in the hope that rising prices will repair their balance sheets. When Chapter 11 is filed, claims are frozen as of the filing date, converted to dollars, and pursued through recovery rather than speculation.
As former FTX General Counsel Lyne Miller pointed out:
“That week in November 2022, with not enough assets on hand, the founders concocted a list of assets (and were desperately chasing new investors). The coin is gone, folks. Your coin is gone, too. That’s why the bankruptcy happened.”
This means that much of FTX’s portfolio was built with commingled customer funds. The court would not have allowed these assets to remain at risk while management bet on a recovery.
Bankman Fried’s calculations only work if regulators and creditors keep exchanges exposed to criminal and liquidity stress operating normally for another two years, a scenario that borders on fantasy.
FTX restart that never happened
That same optimism underlies his claim that FTX was “shut down too soon.”
Bankman Freed claims that the exchange was still generating about $3 million a day in revenue, or nearly $1 billion a year, when Ray shut down operations. He also claimed that management had identified $6 billion to $8 billion in emergency financing that could plug the hole “by the end of November 2022.”
This argument assumes that FTX was a going concern, that it would have continued to trade, that its customers would have remained, and that its venture portfolio would have avoided fire sale discounts.
But by mid-November, the exchange faced a complete collapse of confidence. The business partners had fled, their licenses had been suspended, and law enforcement was cracking down. Under these circumstances, keeping FTX alive would have risked further losses and regulatory backlash.
However, industry experts noted that the bankruptcy estate chose the safer path of freezing the accounts, preserving what was left, and pursuing orderly asset recovery under court supervision.
In fact, Mr. Miller suggested, the bankruptcy estate’s decision helped save some value rather than destroy it.
He said FTX’s disciplined management of Solana and Anthropic shares, which have both soared as the economy improved, was one of the main reasons for creditors’ consolidation.
This means that Bankman Fried’s portrait of a profitable company wrongfully shut down by its lawyers misses this reality. His assumptions about recurring returns and investor confidence belong to a world that no longer exists when trust evaporates.
Competing timelines, competing truths
The crux of this debate centers on which timeline defines a company’s reality.
Bankman Freed measures solvency by asset prices and unclosed operations in 2025. The bankruptcy estate will be measured by the amount remaining in November 2022.
In the real estate timeline, FTX faced an $8 billion hole, assets were illiquid or overvalued, and new financing efforts stalled. The only fair course was to freeze operations and convert claims into dollars.
According to Bankman Fried’s timeline, the meddling actions caused damage as the lawyers “directed” the company and sold assets into a rising market, accruing nearly $1 billion in fees and “destroying” more than $120 billion in virtual upside.
This reversal turns the cleanup into the culprit. This reframes a standard court-supervised downsizing as a hostile takeover that allegedly evaporated future value.
But the central fact remains unchanged. When customers demanded money, FTX was unable to pay. Everything else is retrospective storytelling.
Blockchain researcher ZachXBT says:
“SBF is instead simply trying to point the finger at the bankruptcy team as the real bad guy, weaponizing the fact that all FTX assets/investments have increased in value from Pico Bottom’s November 2022 price, even though they were effectively unable to pay their users during the bankruptcy.”