Joseph Bankman and Barbara Fried, the parents of FTX founder Sam Bankman-Fried, appeared on U.S. television defending their son in light of his conviction and the bankruptcy of the major cryptocurrency exchange. They argued on CNN’s Smerconish that FTX customers have been fully compensated, questioning the legitimacy of the criminal case against him. Bankman is a law professor and Fried is a legal scholar; both became publicly visible after FTX’s collapse and Bankman-Fried’s high-profile legal proceedings.
How Repayments Are Calculated
The parents’ public defense comes as the FTX Recovery Trust prepares a significant distribution. By the end of March, a $2.2 billion disbursement is planned, which is set to bring total recovered funds to an estimated $10 billion. These repayments are calculated based on U.S. dollar asset values at the time of FTX’s bankruptcy filing in November 2022, when Bitcoin traded near $16,800.
This calculation method means that creditors with cryptocurrency deposits will not receive the same quantity of crypto assets lost in the collapse, but rather the equivalent dollar value from 2022 along with interest. As of 2024, with Bitcoin trading close to $69,000, there is a substantial difference between the recovered payout and what the same crypto holdings would be worth today.
Disputes on Customers Being “Made Whole”
Joseph Bankman underscored in the televised interview that, in his view, “the money was always there” and pointed to FTX and associated entities as “very profitable companies with billions of extra assets.” Barbara Fried also stated their belief that customer categories are set for full recovery rates, with some even going beyond face value. She asserted that “everybody has been made whole with 18 to 43 percent interest.”
“The money was always there,” Joseph Bankman maintained. “These were very profitable companies with billions of extra assets.”
However, this narrative is directly challenged by representatives for FTX creditors. Sunil Kavuri, who actively advocates for creditor interests, rejected the Bankman-Frieds’ perspective. He stressed that “FTX creditors are not whole,” emphasizing that in real terms, considering current crypto valuations, many will only get a fraction of their original asset value.
Sunil Kavuri, acting for creditors, pushed back: “FTX creditors are not whole.”
Some customer groups may indeed receive payouts exceeding their 2022 account values thanks to added interest, but for those whose assets appreciated especially sharply—such as Bitcoin holders—the repayments lag far behind what those assets would be worth now. This approach to calculation is a major source of controversy among affected users.
The way FTX handled customer assets during its operation has triggered regulatory changes globally. After FTX’s collapse, jurisdictions like Hong Kong and the European Union introduced rules that prohibit mixing customer deposits with company funds for proprietary trading, aiming to prevent a repeat of the commingling at the heart of the FTX crisis. Joseph Bankman has defended these transfers as common financial practices, though officials and lawmakers have responded with new restrictions.
Political Debate and Pardon Hopes
Barbara Fried has described her son’s prosecution as political, attributing it to the Biden administration’s reportedly hostile stance toward the crypto sector. The family has lobbied for clemency from Donald Trump. From prison, Sam Bankman-Fried has made public statements online supporting the administration’s policies.
Donald Trump, however, has stated he will not pardon Bankman-Fried. This position is particularly noted since Trump previously extended clemency to other individuals in the cryptocurrency industry, such as Ross Ulbricht and Changpeng Zhao. Betting pools indicate only modest chances for a future pardon, while the legal appeal process continues without signs of a near-term resolution.
