SBF says Sullivan & Cromwell contradicted itself with insolvency claims

Law firm Sullivan & Cromwell contradicted itself when it declared that closed crypto exchange FTX US was bankrupt, former CEO Sam Bankman-Fried claimed in a January 17 blog post shared on Twitter.

The law firm was hired by FTX Group to handle the bankruptcy proceedings of several of its subsidiaries, including FTX International, Alameda Research and FTX US. However, Bankman-Fried has stated several times that it believes FTX US is solvent and should not declare bankruptcy.

In a statement filed with the United States Bankruptcy Court for the District of Delaware on January 17, Sullivan and Cromwell reaffirmed their claim that FTX US is insolvent, stating: “The assets identified as of the Petition Date are less than the aggregate amount of third-party customer balances suggested by the book electronic mail for FTX US.

In its submission, SBF rejected the claim and stated that the law firm contradicted itself:

“Later in the same report, S&C revealed that FTX US has an additional $428m USD in its bank account, on top of $181m in tokens – about $609m in total assets. […] therefore FTX US has at least $111m, and likely around $400m, of excess cash above what is required to match customer balances.

The former CEO concluded that, “FTX US is solvent. Customers should be given access to funds.

SBF resigned as CEO of the crypto exchange on November 11, and John J. Ray III was appointed as the company’s replacement CEO. On December 13, SBF was charged with fraud by the US Securities and Exchange Commission in connection with the FTX bankruptcy. The SEC said he “managed years of fraud to hide from FTX investors. […] undisclosed diversion of FTX customer funds to Alameda Research LLC, a privately held crypto hedge fund. Bankman-Fried has pleaded not guilty and is awaiting trial.

After being released on bail, SBF started publishing blog posts on substack starting January 12th, but many in the crypto community were not impressed with his writings.