On-chain sleuth ZachXBT calls out Sam Bankman-Fried for misrepresentation.
In recent crypto news, On-chain detective ZachXBT called out FTX founder Sam Bankman-Fried for misrepresenting the recovery process.
This was after SBF posted on social media claiming “this is where the money went.” For context, creditors of the cryptocurrency exchange FTX are receiving repayments based on asset values from the November 2022 bankruptcy filing.
Investors also missed substantial gains from Bitcoin and Solana price appreciation over the past three years.
ZachXBT responded directly to Bankman-Fried’s post. He stated that the creditors were paid from crypto prices at the time of the FTX Nov 2022 bankruptcy.
The on-chain sleuth also highlighted that they were not paid at current prices, causing users to take massive losses if they held assets like Solana or Bitcoin.
He emphasized that Bankman-Fried learned nothing from prison time and continues spreading the same misinformation.
The bankruptcy process converted all customer cryptocurrency holdings into their November 11, 2022 dollar values.
Customers who held 1 Bitcoin received a claim worth approximately $17,000, the price of Bitcoin on the bankruptcy petition date.
Bitcoin currently trades considerably higher than that 2022 valuation, meaning customers miss out on substantial appreciation.
The same situation applies to Solana holders. SOL experienced major price gains from November 2022 to present, but FTX creditors receive only the petition-date dollar value rather than the actual cryptocurrency.
Deputy Attorney General Todd Blanche addressed this issue in a memo titled “Ending Regulation By Prosecution.”
The document noted that following the prolonged period of price decline in the digital asset market in 2022, multiple companies with custody of investors’ digital assets collapsed and entered bankruptcy.
The on-chain sleuth explained that SBF attempts to weaponize the fact that every FTX asset and investment has increased from the November 2022 market bottom prices.
The exchange factually could not pay out users at the time of bankruptcy. Bankman-Fried’s recent social media posts point to the bankruptcy team as the true villain rather than acknowledging his role in the fraud.
Around 98% of creditors have already received 120% of their claims, according to bankruptcy estate disclosures.
After paying $8 billion in customer claims and $1 billion in lawyer fees, the estate still maintains $8 billion in remaining assets.
The FTX collapse began on November 2, 2022, when crypto news outlet CoinDesk revealed that Alameda Research, a trading firm also owned by Bankman-Fried, held most of its assets in FTX’s native token.
This revelation immediately caused concerns about the connection between the exchange and Alameda and prompted mass customer withdrawals.
As withdrawals accelerated, Binance announced it would sell all FTT holdings and caused the token’s value to plummet. By November 8, the exchange was forced to halt customer withdrawals.
Binance initially agreed to acquire the platform but withdrew the offer within 24 hours after discovering the extent of the fraud.
On November 11, 2022, the exchange and over 100 affiliated entities filed for bankruptcy, with Bankman-Fried stepping down as CEO.
The bankruptcy estate revealed approximately $5.5 billion in liquid assets to date. These holdings include $1.7 billion in cash and Bahamas real estate with a cost basis of $253 million.
The estate also identified approximately $4.6 billion in book value investments across more than 300 companies.
This includes positions in Stocktwits, PlayUpY, Genesis Digital Assets, Anthropic, Toss, 80 Acres Farms, MPL, Starkware, Chipper, Tripledot, Brinc, DoraHacks, Paxos, MystenLabs, and Dave.
The crisis faced in November 2022 was a liquidity crisis, meaning a sudden shortage of cash. The exchange was on track to resolve the shortfall by the end of the month until external counsel seized control.
Equity investors who put roughly $1.95 billion into the exchange are receiving back $230 million.
This is a small fraction of their investments, both in terms of actual payments and in terms of the going concern value of the company.
While customers receive 119% to 143% of petition-date values, equity holders absorb nearly total losses.
Read more on The Coin Republic
