This story somehow never runs out of surprising twists, and this one is massive.

Look back on almost any news coverage, or old posts in online crypto communities made by your average trader - in everyone's mind this was a story about people losing billions.  At one point it was probably true, when the market had just been hit with the Terra/Luna collapse There's no downplaying how much this story changes when it no longer involves anyone losing money.

At one point, every FTX user who had funds sitting on the exchange when it shut down believed they had lost money, with many expecting to hear all of it was gone. 

Searching old posts in online crypto communities made at the time FTX halted trading show there was little hope they would recover any funds they left in FTX controlled wallets.

Now we finally know how the story ends for the users of FTX - they're getting all of it back, and then some.

FTX Owes $11.2 Billion - All of That and More is Ready to Be Paid Out Immediately...

Under new leadership following FTX’s bankruptcy claim and the arrests of its former executives, liquidation of company assets began. This involved mainly dumping massive amounts of crypto over the last few months, enough where the $11.2 billion owed already sits in US dollars they can access anytime. But there’s more to come, as they claim to still have another $2+ billion in crypto that cannot yet be sold.

Sam participated in a common practice among VCs where projects offer them a chance to invest early by buying coins at an extremely low price. However, these coins are 'locked' and unable to be traded until a future date.

The biggest chunk of FTX's recent windfall of cash comes from Sam's early investment into Solana, where he’s rumored to have paid 0.20 cents per coin - they’re worth $133 each today, but FTX's bankruptcy team supposedly dumped a large amount when it was trading closer to $200.

Solana was the largest source of funds, worth billions, but FTX held millions of dollars worth of dozens of other coins, selling these off totaled several more billion dollars.

The end result - FTX can pay back all users right now, with a little extra. 

Sam and His Supporters Say This Changes Everything... 

According to his family, Sam is in prison wrongly labeled as someone who caused investors to lose billions. Now that the trial and sentencing are done, we learn no one lost anything, and they're even walking away with a small profit - this is a completely different situation than what he was sent to prison for.

32-year-old Sam is serving a sentence of 25 years, the prime of his life wasted - this is a punishment designed for someone who caused countless people to lose their hard earned money. 

He'll be 57 when released, that is if he survives prison, as his family says his 'social awkwardness' puts him at high risk of becoming the victim of 'extreme violence' from another inmate confusing Sam's awkwardness for rudeness. His cellmate from the NY jail that held Sam during the trial says there were times other inmates indeed targeted him.

Before Sentencing, The Judge Allowed Some FTX Users To Share Stories of How Their Lives Were Ruined...

At the time, the final outcome was still unknown. These users gave stories of their lives being ruined, stating things like "decades worth of savings" were gone forever because of Sam's actions.

These were the kind of stories the judge heard right before sentencing Sam to 25 years in prison.

It does make you wonder - would the sentence be different if these former FTX users only had stories of their funds being inaccessible, then eventually getting all of it back, with a small profit? Honestly, I have a hard time believing it wouldn't.

But Maybe This Shouldn't Change Anything...

Let's imagine the worst-case scenario. Sam, like everyone else, cannot actually predict the future. While his early investments into projects like Solana are bringing in billions in profits today, things also could have gone the other way.

You can say he made smart investments that paid off, as he knew they would, so from his point of view no user funds were ever at risk. But there's just some things he couldn't have known no matter how much research he put into his decisions. For example, what if Solana faced a massive hack? We've seen hacks ruin projects that had the potential to end up among the top 10 tokens - no one can predict the discovery of a new security vulnerability.

If an unforeseen hack did bring down Solana, this would be a story of FTX billions short on what they owe.

So, while things end with no one losing money, Sam did, in fact, gamble with user funds and expose them to potentially losing all of it.

On that note, while he was risking other people's money, did he plan to share the rewards if it all worked out? Of course not. Sam quietly 'borrowed' user funds without them knowing, he would have taken the profits and return what he had borrowed just as quietly as he took it.

We've all Been Damaged By Sam's Actions...

I was not an FTX user, but that didn't matter as we all watched our portfolios go into a nosedive the day FTX halted trading, and those losses weren't recouped for over a year.

But what many are unaware of is that the damages actually continue to the present day. The reason FTX has so much money right now because they dumped their massive stash of coins on the market over the last year, often at times the market was on the rise, bringing that rise to a halt.

In fact, FTX is the reason why we saw Bitcoin ETFs bringing billions of new investments into the market, and the price of Bitcoin barely move. Sam had purchased shares of Grayscale's Bitcoin Trust which automatically was converted into shares of Grayscale's ETF, so when the ETF went live FTX had 22 million shares of it - which they immediately dumped onto the market.

But it was FTX's Solana holdings that became worth billions while Sam was on trial - there's no way to know what Solana's price would be today if FTX hadn't dumped billions of dollars worth - but higher for sure, possibly much higher.

Fact is - Sam is a Liar...

Ironically, his largest broken promise is in print, on one of Sam's strangest marketing decisions.

In Closing...

This is all still sinking in, but when I think about Sam being in prison right now, it feels justified. He deserves some punishment.  Where I'm torn is if in 15 or 20 years from now, I'll feel like it's justified that he's still there. 

From a legal standpoint, the end result of a crime usually makes a massive difference.  For example, imagine someone driving the wrong way on a freeway because they're extremely drunk, and they manage not to kill anyone only because the other drivers swerved to avoid them. Then imagine the same scenario but in this one, the drunk driver kills an innocent driver in a head on collision.  Even though we're fully aware that both literally made the exact same poor choices - one could end up in prison for a few months, and the other for decades.

Ultimately, the choices Sam made led him here, making it hard to feel sorry for him now. So while I won't be campaigning to #FreeSam, I also wouldn't be angry to hear Sam's legal team was able to have the sentence re-evaluated, and reduced by a few years.

If you were the judge overseeing the case - what, if anything, would you change given what you know today? We want to know - share your answer with us on X @TheCryptoPress

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Author: Ross Davis
Silicon Valley Newsroom
GCP | Breaking Crypto News

"The situation has stabilized, and the dumpster fire is out, announced FTX attorney Andy Dietderich during a hearing at a Delaware bankruptcy court.

According to our source (who has been 100% accurate with his information since we first spoke with them back in December of last year) FTX is in such a better position than anyone thought possible, re-starting the exchange is now on the table. 

"The overwhelming majority of people currently involved with FTX want to see it up and running again" my insider said last night on Telegram, and then elaborated on what a perfect outcome would be for them "This could end up simply being a story of a company with a bad CEO, a problem that was fixed, but still has a happy ending where no business is forced to shut down, all the employees don't lose their jobs, and investors and customers end up with all the money they're supposed to have."

At this point I was a bit stunned... how did this whole situation go from sounding like one of the biggest disasters in the history of business, to something that could actually end with a healthy company, and everyone getting what is owed to them?

Here's how it could happen:

In mid-November when FTX filed for bankruptcy they owed $3.1 billion to its 50 largest creditors and at least $5 billion more to its nine million customers and smaller creditors.

At that time the company was able to find $3.3bn of assets... so, about $5 billion short. Pretty bad. 

I think most people assumed there wouldn't be a dramatic change in those numbers, but those people would be wrong. Since then, Sam was booted out of the CEO position and a new team came in to clean up and go over everything. 

For much of FTX's business there was no traditional record keeping, and it was their job to review emails, notes, chat logs, anything that contained business details, and create the proper accounting to go with them.

They found more than anyone thought possible...

Frankly, after we discovered the new team billing the bankrupt company for over $30 million for a single month of work, I was wondering if they were really doing enough to justify their price tag. Now it's a bit less shocking to see them charge millions if they’re discovering billions in FTX's assets. 

Total funds available to FTX have more than doubled since they took over. In the 5 months they've been there they we're able to locate $800M in cash, along with $600M in “settlements and investments receivable”.

But the biggest surprise: FTX's huge crypto holdings, which then increased in value...

With FTX in very different circumstances than before, new options seem possible...

With the much improved circumstances FTX finds the business in,  they have narrowed it down to two options.

Option 1: Pay back what they can, then close. Use the funds to pay off debts, then shut down FTX for good.  Keep in mind, they're still about $1 billion short, with around $7 billion of the approximately $8 billion owed - people would get most, but not all of what they are owed.

Option 2: Re-open FTX. Conduct marketing research to find out if people would return to trade on FTX, now that Sam was out of the picture.  If this shows it could be successful, and the largest debt holders are willing to wait, they could re-launch the exchange using some of the funds they currently have, and pay some of their debts with what is left.  Then over time the remaining money owed would be paid out of future profits from the business.

Much of it will come down to how the public views the FTX brand, with Sam now removed...

This was a unique situation where even though you could argue that if Sam was even capable of doing what he is accused of, would have required others at FTX to have failed at their job, or been corrupt themselves - it seems like somehow 100% of the blame is directed at Sam, both from the public and law enforcement. 

Sam Bankman-Fried Leaves an NY Court after a second batch of charges against him were added.

Next time we hear those names it will probably be as they're being used as witnesses against Sam.

In conclusion…

Remember - if they re-open the exchange they would also return user funds by putting those funds back onto the exchange, a powerful trick to get people to log back in.

Between that and my opinion that most people will see Sam's removal as the problems being 'fixed' - I think a successful future is absolutely possible for FTX. 

Official bankruptcy court filings state that FTX owes more than $3 billion to its top 50 creditors. The largest single loan listed in the document is over $226 million, with the rest of the total debt owed falling somewhere between $21 million and $203 million.

The "hack"...

As things unfolded last week a significant number of tokens were moved from the official storage wallets of FTX. It's not surprising that some would suspect a "inside job," but former FTX employees are spreading rumors that the same authorities from the Bahamas government who are investigating the company for possible legal violations are also the thieves.

Analytics firm Chainalysis is tracking the funds that originated from the FTX exchange and say the funds are now being traded from Ethereum to Bitcoin. The FTX hacker once held 228,523 ETH, making them one of the top Ether wallets globally.

...but was there actually no hacker at all?!

To be fair, the rumors started because no one was coming forward to say otherwise.  Millions in crypto gets moved, with no legitimate entity claiming responsibility, the logical conclusion is a hack. 

After coming forward, the Bahamas government confirmed they were indeed behind it - but it wasn't corrupt officials stealing funds. Regulators in the Bahamas officially state they are in possession of the funds which were taken as part of a seizure of assets - to prevent anyone at FTX from doing anything with them.

It all seemed settled, then we learned - this isn't what happened either.

The actual story with the FTX "hack"...

Collateral Damage...

So far, Solana has lost over 60% of its value since the FTX saga began, and users have removed about an equal percentage from the total staked supply. In response, Tether announced they will be taking $1 billion USDT it had on the Solana blockchain and moving it to the Ethereum blockchain, as they don't foresee the supply being needed on the Solana blockchain in the near future.

While there's no shortage of die-hard Solana supporters posting that they're taking this opportunity to load up on SOL tokens at a discount, others are saying there's still a big hit to come, with FTX rumored to a large amount of Solana tokens that they will probably be forced to put on the market. 

Sam Bankman-Fried...

One of the most interesting things to watch in the Sam Bankman-Fried (aka SBF) fallout are those who previously praised him, now trying to figure out why they ever said things that sound completely insane today.

In all fairness, while Sam's wrongdoings were deliberate and dishonest - blaming everyone who once worked with, or once simply liked the guy is going a step too far, in my opinion. If the accusations we've heard are true, you can be sure very few people knew the truth

Sam had accumulated a sizeable list of endorsements, and it wasn't made up of a bunch of easily scammed or gullible people...

Even the person who begun FTX's downfall first believed they were legit.  Binance CEO 'CZ' started the avalanche that would burry Sam and FTX by sending out of tweet when he lost confidence in the company - but before that, he trusted Sam and FTX enough to have $2 billion of his assets tied up in their FTX's official token, FTT.

Earning trust within an industry can be a chain reaction, where getting 'in' with one person who is more established than yourself can lead to a dozen more if you play your cards right.  So who was the first 'big name' in crypto to publicly link themselves with Sam? I have no idea, and they aren't to blame for this anyway.

While researching another story I came across this, the only organization that I've seen address the situation by adding disclaimers to their old write-ups about Sam.

The organization is called 80,000 Hours, and they say their goal is to 'provide research and support to help students and graduates switch into careers that effectively tackle the world’s most pressing problems' 80,000 hours refers to the average time someone will spend working in their chosen career in their entire lifetime. 

What was a page on their site containing 10 paragraphs of pure praise for SBF, now begins with a statement:

 Our statement regarding the collapse of FTX

The collapse of FTX is likely to cause a tremendous amount of harm – to customers, employees, and many others who have relied on FTX. We are deeply concerned about those affected and, along with our community, are grappling with how to respond.

Though we do not know for sure whether anything illegal happened, we unequivocally condemn any immoral or illegal actions that may have taken place.

Prior to this, we had celebrated Sam Bankman-Fried’s apparent success, had held him up as a positive example of someone pursuing a high-impact career, and had written about how we encouraged him to use a strategy of earning to give (for example, on this page). We feel shaken by recent events, and are not sure exactly what to say or think.

In the meantime, we will start by removing instances on our site where Sam was highlighted as a positive example of someone pursuing a high-impact career, since, to say the least, we no longer endorse that. We are leaving up discussions of Sam in places that seem important for transparency, for example this blog post on the growth of effective altruism in 2021, and this user story.

In the coming weeks and months we will be thinking hard about what we should do going forward and ways in which we should have acted differently.

If you are out there trying the best you can to use your career to help solve the world’s most pressing problems with honesty and integrity, we also want to say we support and value you.

We are following the situation closely and hope to write more soon.