Three years after the collapse of FTX, Sam Bankman-Fried breaks his silence again from his cell. The fallen former billionaire, convicted for massive fraud, delivers an unexpected confession. His biggest mistake, according to him, was not the reckless management of funds… but entrusting the reins of FTX to John Ray III, just before the bankruptcy. A choice he now considers the point of no return in the collapse of his crypto empire.
In brief
- •Sam Bankman-Fried states from his cell that his biggest mistake was not the fraud, but the transfer of control of FTX to John Ray III.
- •This transfer took place on November 11, 2022, a few minutes before a potential rescue offer was made known to him.
- •John Ray’s arrival was accompanied by the immediate filing for bankruptcy, triggering the definitive fall of FTX.
- •SBF’s statement reignites the debate on crisis governance and alternatives that could have been considered before liquidation.
The fatal transfer : a belated confession from Sam Bankman-Fried
While there is new tension around the plea of former executive Ryan Salame, Sam Bankman-Fried, currently incarcerated in the United States, bluntly names in an exchange published on October 4 what he considers his most catastrophic decision during the last days of FTX : “by far, the biggest mistake I made was handing over control of the company”.
He is referring here to the official transfer of FTX’s leadership to John J. Ray III, which occurred on November 11, 2022. Shortly after this signing, SBF claims he received a call about a potential investment offer, which he judged sufficient to save the company from bankruptcy. But, according to him, it was already too late: the document was signed, control was transferred, and the process irreversible.
The publicly released elements today help better understand the context and conditions of this critical shift :
- •On November 9, 2022, two days before the bankruptcy, lawyer Andrew Dietderich from the firm Sullivan & Cromwell (S&C) sent an email to SBF proposing the hiring of John Ray as Chief Restructuring Officer in preparation for a possible bankruptcy filing ;
- •On November 11, 2022, SBF officially signed over control to Ray, who immediately filed for bankruptcy ;
- •In the meantime, SBF claims he was contacted about an external financing solution that, according to him, could have prevented the bankruptcy.
This declaration from Sam Bankman-Fried comes nearly three years after the events, while legal and reimbursement proceedings are still ongoing.
A profitable but contested restructuring
Since his appointment, John Ray III has overseen a massive restructuring of the crypto exchange FTX, prioritizing the recovery of funds for creditors. Indeed, $7.8 billion has already been redistributed through three payment waves (February, May, and September).
The goal announced by Ray’s team is ambitious: to repay at least 98 % of clients at 118 % of their account value, as evaluated in November 2022. Furthermore, recovered assets amount to $16.5 billion, while $8.7 billion remain to be disbursed. This repayment trajectory, praised by some creditors, is used as evidence of strict management.
However, this strictness comes at a cost. The firm Sullivan & Cromwell, involved from the early hours of the bankruptcy, has received more than $171.8 million in legal fees as of June 27, 2024, according to Reuters.
In February 2024, a group of creditors tried to sue S&C for complicity in fraud and breach of fiduciary duty, accusing the firm of profiting from the financial chaos of the crypto platform FTX. However, the lawsuit was dropped in October 2024.
SBF’s statements, while in no way absolving his criminal responsibility, revive a sensitive question: would an alternative to bankruptcy have been possible if the timing had been different? Although repayments are progressing, this statement further shows the central role of crisis governance in major bankruptcies in the sector.