FTX, according to Bankman-Fried's attorneys, "was solvent at the time of the bankruptcy petition. The money was there — not lost. The harm to customers, lenders, and investors is zero."

The government and Ray, the experienced corporate rescuer who became the chief executive of FTX in the bankruptcy, say: "Not so fast."

In his submission, Ray told the judge that every one of those statements about FTX's solvency and the absence of losses is "categorically, callously, and demonstrably false." The quote from the bankruptcy hearing transcript, he says, "ignores pages and pages of important commentary, qualifications, and caveats from that hearing" that make the debtors' lawyer's statement extremely conditional.

"Mr. Bankman-Fried's victims will never be returned to the same economic position they would have been in today absent his colossal fraud," Ray asserted. (Emphasis his.)

One reason that's so is that the victims' claims will be adjudicated based on the value of their crypto holdings at FTX as of the day of the bankruptcy filing, converted into dollars. They won't be getting their bitcoins or other crypto tokens back. That's a blow, because one bitcoin (to take one example) was worth $16,778 on the day of the bankruptcy, and more than $70,000 now. So they won't profit from a fourfold increase in the value of bitcoin in the interim.

Whether they will receive anything is still uncertain. No creditors have been reimbursed, in part because Ray is still trying to find all FTX's assets and clawing back money that was paid out to Bankman-Fried's associates, including his parents.

Ray plainly resents Bankman-Fried for trying to blame the bankruptcy team for frittering away FTX's value and his claim that he tried to help Ray restructure the company but was rebuffed. In fact, Ray says, it's only through his own team's efforts that any residual value at all exists in FTX.

"Mr. Bankman-Fried continues to live a life of delusion," Ray told the judge. "The 'business' he left ... was neither solvent nor safe. Vast sums of money were stolen by Mr. Bankman-Fried." The booty was converted into "investments in Bahamas real estate, cryptocurrencies or speculative ventures."

Not only that, Ray and the prosecutors say that far from helping with the restructuring, Bankman-Fried interfered with the government's investigation and the bankruptcy recovery efforts. The prosecutors point to his witness tampering and accuse him of lying on the stand during his trial. Ray says he "actively worked to hinder the preservation of assets," in part by transferring some FTX assets to the Bahamas and trying to gain access to FTX's internal systems.

"Only by cutting off Mr. Bankman-Fried was the Chapter 11 team able to stop the bleeding," Ray stated.

...continued

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