Connect with us

Hi, what are you looking for?

World News

Failed crypto exchange FTX has recovered over $5B, attorney says

NEW YORK/WILMINGTON, Del. — Crypto exchange FTX has recovered more than $5 billion in liquid assets but the extent of customer losses in the collapse of the company founded by Sam Bankman-Fried is still unknown, an attorney for the company told a US bankruptcy court on Wednesday. 

The company, which was valued a year ago at $32 billion, filed for bankruptcy protection in November and US prosecutors accused Bankman-Fried of orchestrating an “epic” fraud that may have cost investors, customers and lenders billions of dollars. 

“We have located over $5 billion of cash, liquid cryptocurrency and liquid investment securities,” Andy Dietderich, an attorney for FTX, told US Bankruptcy Judge John Dorsey in Delaware at the start of Wednesday’s hearing. 

Mr. Dietderich also said the company plans to sell nonstrategic investments that had a book value of $4.6 billion. 

However, Mr. Dietderich said the legal team is still working to create accurate internal records and the actual customer shortfall remains unknown. The US Commodities Futures Trading Commission has estimated missing customer funds at more than $8 billion. 

Mr. Dietderich said the $5 billion recovered does not include assets seized by the Securities Commission of the Bahamas, where the company was headquartered and Mr. Bankman-Fried resided. 

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, Mr. Dietderich said. 

ASSET SALES 

FTX could raise additional funds in the coming months for the benefit of customers after Mr. Dorsey approved FTX’s request for procedures to explore sales of affiliates at Wednesday’s hearing. 

The affiliates — LedgerX, Embed, FTX Japan and FTX Europe — are relatively independent from the broader FTX group, and each has its own segregated customer accounts and separate management teams, according to FTX court filings. 

The crypto exchange has said it is not committed to selling any of the companies, but that it received dozens of unsolicited offers and plans to hold auctions beginning next month. 

The US Trustee, a government bankruptcy watchdog, opposed selling the affiliates before the extent of the alleged FTX fraud is fully investigated. 

In part to preserve the value of its businesses, FTX also sought Mr. Dorsey’s approval to keep secret 9 million FTX customer names. The company has said that privacy is needed to prevent rivals from poaching users but also to prevent identity theft and to comply with privacy laws. 

Mr. Dorsey allowed the names to remain under wraps 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,” Mr. 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 US Trustee had argued that US bankruptcy law requires disclosure of creditor details to ensure transparency and fairness. 

In addition to selling affiliates, a company lawyer on Wednesday said FTX will end its 19-year $135 million sponsorship deal with the NBA’s Miami Heat and a 7-year about $89 million deal with the League of Legends video game. 

FTX’s founder, Mr. Bankman-Fried, 30, was indicted on two counts of wire fraud and six conspiracy counts last month in Manhattan federal court for allegedly stealing customer deposits to pay debts from his hedge fund, Alameda Research, and lying to equity investors about FTX’s financial condition. He has pleaded not guilty. 

Mr. 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. 

Some of those investors were disclosed in a Monday court filing, including American football star Tom Brady, Brady’s former wife supermodel Gisele Bündchen and New England Patriots owner Robert Kraft. — Reuters

Enter Your Information Below To Receive Free Trading Ideas, Latest News, And Articles.
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

You May Also Like

Economy

THE MONETARY Board signaled its readiness to continue raising benchmark interest rates if inflation persists, putting it at odds with other central banks which...

Economy

PRESIDENT Ferdinand R. Marcos, Jr. will invite potential investors to provide capital to his proposed sovereign wealth fund at the World Economic Forum meeting...

Economy

THE Philippine business delegation to the Davos conference in Switzerland was led by the heads of some of the country’s biggest blue-chip companies representing...

World News

WASHINGTON — New Jersey and Ohio said on Monday they were joining other states in banning use of the popular video app TikTok on...

Dislaimer: FutureMoneyFate.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.


Copyright © 2023 FutureMoneyFate.com All Rights Reserved. Spirit