Bankman-Fried Criticizes New FTX CEO, Questions Why US Customer Funds Still Not Returned

Andrew Ross Sorkin and Sam Bankman-Fried on stage at the 2022 New York Times DealBook in New York City on Nov. 30, 2022. Thos Robinson/Getty Images for The New York Times

FTX founder Sam Bankman-Fried, who stepped down as CEO after the company’s bankruptcy, has publicly questioned why FTX customer funds hadn’t been returned to U.S. exchange users.

“When I filed, I’m fairly sure FTX US was solvent, and that all US customers could be made whole. To my knowledge, it still is today,” he wrote on Twitter on Dec. 1. “I was expecting that to happen. I’m surprised it hasn’t. I’m not sure why US withdrawals were turned off.”

Veteran insolvency expert John Ray III, the current FTX CEO, and his team are examining the company’s accounts in search of cash, cryptocurrency, and other assets that can be liquidated to repay creditors.

Bankman-Fried’s empire owes more than $3 billion to its top 50 creditors, many of which are massive companies such as Amazon Web Services. Also among the creditors is Jimmy Buffet’s Margaritaville beach resort in the Bahamas, which FTX owes more than $55,000 in unpaid food and lodging fees.

“There’s a lot of creditors out there with actual loan agreements that are collateralized,” Jim Lewis, co-founder of Wall Street Silver, a popular Twitter account and Reddit forum, told The Epoch Times.

Lewis believes these loan agreements will make it difficult for average FTX users to recover their lost funds.

“I’m sure there’s a seniority ranking there, and I guarantee customers are at the end of the line,” he said. “It’s up to the lawyers and the courts at this point.”

Bankman-Fried’s tweet comes after reports of higher than previously expected cash holdings at FTX and sister company Alameda Research. The conglomerate’s new management has discovered at least $1.24 billion in cash, and while this isn’t nearly enough to cover the $8 billion in liabilities, some are actually agreeing with the estranged founder’s concerns on the matter.

“That’s a pretty fair question,” conceded Matt Korhs, a popular online financial commentator, reacting to Bankman-Fried’s remarks on U.S. customer funds not being returned. Kohrs, however, told The Epoch Times that he ultimately believes the ousted founder is a criminal and the company’s new management is attempting to do the right thing.

“Call me crazy, but I think SBF is telling the truth,” wrote billionaire hedge fund manager Bill Ackman on Twitter on the eve of Bankman-Fried’s DealBook interview. The FTX founder replied to the tweet, expressing his gratitude.

Lewis sees the founder’s recent moves as a strategic move to pressure those currently in charge of FTX to refund U.S. customers. “It’s in his interest that U.S. customers be made whole, so that U.S. criminal authorities don’t file a case against him. Then all he has to deal with is the Bahamas.”

Some signs of hope are emerging for the crypto exchange’s creditors after a recent report by Bloomberg revealed that FTX-linked company LedgerX is preparing to transfer $175 million to the FTX conglomerate to assist with bankruptcy. It has been alleged these funds will be used to pay back creditors.

The FTX media team didn’t respond to requests for comment.

Other financial experts believe the comments by the former crypto magnate are a publicity stunt.

“I believe Bankman-Fried is a generational fraudster who will be in prison for a very long time,” veteran short-seller Marc Cohodes told The Epoch Times. Cohodes famously called FTX a scam in September, two months before the firm filed for bankruptcy.

Ben Hunt, creator of the finance newsletter Epsilon Theory, suggested Bankman-Fried’s persona is entirely manufactured. “Part of this narrative construction effort is the self-styling of his name as ‘SBF,’ which cartoonifies and infantilizes his identity in a pleasing manner.”

Nonetheless, the FTX founder continues to make the rounds in the media, appearing in a Good Morning America segment on Dec. 1.

Bankman-Fried didn’t respond to requests for comment.

As for what this means for the future of cryptocurrencies, Lewis predicts the asset class may soon conclude its time in the sun. He attributes the ascension of crypto to loose monetary policy by the Federal Reserve and believes it will wither away in today’s tighter monetary policy environment.

“The crypto universe was only working because the Fed was printing $120 billion a month, and there were so many dollars sloshing around the system, and so much leverage, and so much easy debt that it had to get soaked up somewhere.”

“Now that dollars are tightening ... you’re observing people pulling money out of the crypto universe, so it’s a negative sum game.”