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FTX Bankruptcy Shocker:  100,000 BTC Customer Claims vs. 105 BTC Found

FTX customers face major Bitcoin shortfall, John Ray III reports

John Ray III, stepping into the tumultuous aftermath as FTX's CEO, starkly contradicts Sam Bankman-Fried's (SBF) optimistic narratives of solvency and minor customer impact during the exchange's downfall. In a revealing March 20 correspondence to Judge Kaplan, Ray dispels the former CEO's claims as "categorically, callously, and demonstrably false," shedding light on the grim reality that FTX customers face a substantial loss from which full recovery remains uncertain. He illustrates the dire state of FTX's reserves, disclosing:

 "When I took over as CEO, there were only 105 bitcoins left on the exchange, against customer entitlements of nearly 100,000 bitcoins. Why were the bitcoins missing?"

This rhetorical question underlines the vast discrepancy between customer expectations and the harsh reality, pointing directly to SBF's mismanagement and alleged theft of assets that left the exchange unable to fulfill its obligations to customers. Ray's revelations starkly contrast with SBF’s lawyers' pleas for leniency, arguing the exchange's supposed solvency at bankruptcy and the prospect of full restitution "with interest." 

Yet, Ray forewarns: 

"Even the best conceivable outcome in the Chapter 11 proceeding will not yield a true, full economic recovery by all creditors and non-insider equity investors as if the fraud never happened," 

Thereby he challenged any notion of a benign end to the exchange's saga and highlighted the irrevocable harm inflicted on FTX customers.

The path to recovery and restructuring efforts

Under John Ray III’s stewardship, FTX is undergoing a rigorous transformation, pivoting from what he metaphorically describes as "a metaphorical dumpster fire" to a more stable entity capable of navigating its Chapter 11 bankruptcy proceedings. Ray highlights the enormity of the challenge faced, stemming from the disastrous management under Sam Bankman-Fried. Despite the daunting task, Ray commends the tireless dedication of his restructuring team, stating: 

"Things that [SBF] stole, things he converted into other things, whether they were investments in Bahamas real estate, cryptocurrencies, or speculative ventures, were successfully recovered through the enormous efforts of a dedicated group of professionals."

This commendation not only showcases the complexity of the recovery process but also illustrates the diverse nature of assets and investments that needed addressing to salvage any value for the exchange's creditors and impacted customers.