TLDR

  • Sam Bankman-Fried asserts that FTX had a $16.5B surplus when it filed for bankruptcy in 2022.
  • SBF’s Rule 33 motion contends that customer assets were recoverable and not lost due to insolvency.
  • The estate intends to pay more than 118% of customer claims based on 2022 market values.
  • Legal experts state that fraud charges are based on conduct rather than post-bankruptcy recovery.

Sam Bankman-Fried has submitted a motion seeking a new trial, arguing that FTX was not insolvent when it filed for bankruptcy in November 2022. The motion claims the exchange had a net asset value of $16.5 billion at that time, challenging the previous courtroom account of fraud and misappropriation.

The Rule 33 motion filed on February 10 states that new evidence and omitted testimonies might have altered the trial’s outcome. It also claims that the prosecution misrepresented FTX’s financial status, asserting that the company had more assets than liabilities at the time of collapse.

FTX Solvency Figures and Bankruptcy Valuation

According to court documents, SBF argues that the base was undervalued during the trial. He cites data showing a net surplus of $16.5 billion in assets as of November 11, 2022. This includes stakes in firms such as Anthropic, which increased in value after the bankruptcy date.

However, under U.S. bankruptcy law, customer claims are calculated based on the value of assets on the petition date, not on subsequent appreciation. Many users deposited assets like Bitcoin when prices were higher, but their claims are now valued at the lower 2022 levels. A user who deposited one Bitcoin does not receive one Bitcoin in return but its 2022 dollar equivalent.

Reuters has reported that the FTX estate plans to pay at least 118% of the dollar value of claims. But this percentage is based on petition-date pricing, not current market rates. Critics argue that the repayment in dollars does not fully restore what customers anticipated—especially for those who thought they were holding crypto, not its dollar equivalent.

Three Dimensions of Solvency in Question

Bankman-Fried’s defense focuses on accounting solvency, indicating that the exchange’s assets exceeded its liabilities on paper. But legal analysts point out that solvency in crypto also depends on liquidity and governance.

Liquidity solvency considers whether the firm had sufficient on-chain assets to handle withdrawals. In [the situation not fully described], over $5 billion in withdrawal requests overwhelmed available funds in just two days. The estate’s illiquid holdings, while valuable, could not meet those demands in real time.

Governance solvency examines how the exchange managed client funds and conflicts of interest. The trial evidence showed that Alameda Research had extensive access to FTX customer funds, and internal controls were minimal. These governance issues remain central to the fraud case.

Fraud Law Focuses on Conduct Not Final Recovery

SBF’s legal team argues that since users might be repaid, the trial’s fraud narrative is weakened. But legal experts note that repayment does not eliminate criminal liability. Fraud is judged by what was promised to users and how funds were managed, not whether users are ultimately made whole.

The government’s case showed that customer deposits were used as collateral for Alameda’s trading activities, and customers were told their funds were segregated. Misrepresentation and failure to follow risk controls form the basis of the charges.

Even if later recoveries cover customer claims, this does not change what the company told users or how funds were administered. As one part of the court filing noted, “The estate’s current balance sheet does not rewrite the past conduct under scrutiny.”