FTX Recovers $5 Billion in Cash and Crypto to Pay Clients

FTX Recovers $5 Billion in Cash and Crypto to Pay Clients
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Collapsed cryptocurrency exchange FTX says it has recovered more than $5 billion in cash and crypto assets that it can sell to help pay customers and investors, a company lawyer told a Delaware bankruptcy court on Wednesday.

Company advisers have identified a significant number of cryptocurrencies that will be more difficult to sell without depressing the market price of those digital tokens, FTX attorney Andrew Dietderich said. The company is also trying to sell other “non-strategic investments” made by FTX that have a book value of $4.6 billion, he said.

It’s still unclear how much of the shortfall FTX’s creditors will face as the company’s advisers continue to work to salvage what they can from the cryptocurrency giant. shock implosion in November. But the company, once one of the world’s largest cryptocurrency exchanges, has identified more than 9 million customer accounts, Dietderich said, suggesting there will be an incredibly long line of people looking to bounce back.

Federal regulators have estimated that FTX customer losses exceed $8 billion. John J. Ray III, the corporate liquidation expert who now runs the company, saying lawmakers last month the company will not be able to recover all of its losses and expects the process to take “months, not weeks.”

FTX Co-Founder Sam Bankman-Fried pleaded not guilty to eight criminal counts of fraud and money laundering in Manhattan federal court last week. Federal prosecutors and regulators have accused him of orchestrating a multiyear scheme to defraud the company’s clients by diverting their deposits to his affiliated investment firm, Alameda Research, and then using the funds as a personal piggy bank.

“We know what Alameda did with the money,” Dietderich told bankruptcy court on Wednesday. “He bought planes, houses, threw parties, made political donations. He made personal loans to its founders. He sponsored the FTX Arena in Miami, a Formula 1 team, League of Legends, Coachella, and many other businesses, events, and personalities.”

Bankman-Fried and his inner circle also made risky bets on cryptocurrency, “often unsuccessfully,” Dietderich said, and invested in a variety of businesses. “We know that all of this has left a shortfall in value to pay customers and creditors,” he said. “The amount of the deficit is not yet clear. It will depend on the size of the claims class and our recovery efforts.”

Different authorities are already competing to claim FTX’s stakes. The Department of Justice last week saying bankruptcy court that the federal government had seized nearly $500 million worth of shares from the online stock trading company Robinhood linked to Bankman-Fried. And authorities in the Bahamas, where FTX was headquartered, seized a stash of the company’s cryptocurrencies. It includes a large amount of FTT, the highly volatile digital token issued by FTX, and is worth approximately $170 million, Dietderich told the court on Wednesday.

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