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SBF says Sullivan & Cromwell Contradicted itself with Insolvency Claims

According to the former FTX CEO, the exchange’s new attorneys are not considering consumer bank balances.

Former CEO Sam Bankman-Fried said in a blog post uploaded on Twitter on Jan. 17 that law firm Sullivan & Cromwell contradicted itself when it stated that halted crypto exchange FTX US is insolvent.

FTX Group hired the law firm to manage the bankruptcies of several of its businesses, including FTX International, Alameda Research, and FTX US. Bankman-Fried, on the other hand, has maintained on multiple occasions that FTX US is solvent and should not have declared bankruptcy.

Sullivan and Cromwell reiterated its claim that FTX US is insolvent in a statement filed with the United States Bankruptcy Court for the District of Delaware on Jan. 17, stating: “The assets identified as of the Petition Date are substantially less than the aggregate third-party customer balances suggested by the electronic ledger for FTX US.”

“Later in the same report, S&C reveals that FTX US has an additional $428m USD in bank accounts, on top of the $181m of tokens — for roughly $609m of total assets […] thus FTX US had at least $111m, and likely around $400m, of excess cash on top of what was required to match customer balances,” SBF wrote in his post.

“FTX US is solvent,” the former CEO concluded. Customers must have access to their monies.”

On November 11, SBF resigned as CEO of the crypto exchange, and John J. Ray III was named as his replacement. The US Securities and Exchange Commission charged SBF with fraud in connection with FTX’s bankruptcy on December 13. He “orchestrated a years-long deception to conceal from FTX’s investors […] the secret diversion of FTX clients’ monies to Alameda Research LLC, his privately-held crypto hedge fund,” according to the SEC. Bankman-Fried has pled not guilty and will stand trial.

SBF began publishing blog articles on substack on Jan. 12 after being released on bail, but many in the crypto world have been underwhelmed with his musings.

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