Crypto exchange FTX has recovered more than US$5 billion in cash and liquid cryptocurrencies and securities, an attorney for the bankrupt company founded by Sam Bankman-Fried told a judge on Wednesday (Jan 11).
The company filed for bankruptcy in November and United States prosecutors accused Bankman-Fried of orchestrating an “epic” fraud that may have cost investors, customers and lenders billions of dollars. Attorneys and advisers overseeing the bankrupt company are now trying to recover funds to repay creditors.
The new figure also doesn’t include $425 million held by the securities regulator in the Bahamas, where FTX was based. Despite finding more assets, FTX still has a large hole to fill. FTX in a November filing indicated it owed nearly $3.1 billion to 50 of its largest FTX’s largest creditors, but the total number of creditors tops 1 million and the overall shortfall in assets is seen at several billions of dollars.
FTX also said Wednesday it has identified more than 9 million customer accounts with about 120 billion associated transactions and that it’s trying to recreate petition date claim values for every customer. “We are building financial statements from the ground up using the general ledger and bank transaction records rather than the previous incomplete and unreliable financial statements of the debtors,” Landis said. “This will put us in a position to describe the financial results of the debtors accurately for the first time.”
FTX’s attorney estimated the seized assets were worth as little as $170 million while Bahamian authorities put the figure as high as $3.5 billion. The seized assets are largely composed of FTX’s proprietary and illiquid FTT token, which is highly volatile in price, Dietderich said. CUSTOMER PRIVACY
U.S. Bankruptcy Judge John Dorsey in Delaware on Wednesday granted FTX’s request to keep secret 9 million FTX customer names. But he allowed the names to remain under wrap for only three months, not six months as FTX wanted. “The difficulty here is that I don’t know who’s a customer and who’s not,” Dorsey said. He set a hearing for Jan. 20 to discuss how FTX will distinguish between customers and said he wants FTX to return in three months to give more explanation on the risk of identity theft if customer names are made public.
Media companies and the U.S. Trustee, a government bankruptcy watchdog that is part of the Department of Justice, had argued that U.S. bankruptcy law requires disclosure of creditor details to ensure transparency and fairness. FTX said disclosing customer names could allow rivals to poach users, undermining the value of the business that FTX is trying to sell. FTX’s legal team was also seeking approval on Wednesday for procedures to sell affiliates LedgerX, Embed, FTX Japan and FTX Europe.
The U.S. Trustee, a bankruptcy watchdog that is part of the Department of Justice, has opposed selling the affiliates before the extent of the alleged FTX fraud is fully investigated. In addition to selling affiliates, a company lawyer on Wednesday said FTX will end its seven-year sponsorship deal with the League of Legends video game, which started in 2021.
Bankman-Fried has acknowledged shortcomings in FTX’s risk management practices, but the one-time billionaire has said he does not believe he is criminally liable. In addition to customer funds lost, the collapse of the company has also likely wiped out equity investors
