That is a bunch of BS, when there was no active combat in the area, and the Liberty's hull is iconoclastic in it's profile.
It is not plausible that multiple pilots and and naval personel could not identify the Liberty as an American vesel.
They identified the letters GTR5. That is documented. Are the Liberty crew members lying when they say they were clearly flying an American flag?
American ships shot other American ships flying the flag at Guadalcanal and other places.