Liquidators recovered over $5 billion in assets

A little hope for investors. The liquidators of US cryptocurrency exchange FTX said on Wednesday they had recovered more than $5 billion worth of assets that could be returned to the company’s customers and creditors.

These assets include cash, as well as “liquid” cryptocurrencies and financial securities, that is, easily converted into cash, one of the group’s lawyers, Andrew Dietderich, explained during a court hearing. Federal Corporate Bankruptcy Board, in Wilmington (Delaware), in the eastern United States.

In the document requesting to place FTX under the bankruptcy system, filed in early November, the group had quantified its liabilities between 10 and 50 billion dollars. This includes the frozen assets of platform customers, which included more than 9 million accounts according to the lawyer, as well as debts from FTX.

Sam Bankman-Fried charged with fraud

Former FTX CEO Sam Bankman-Fried is accused of embezzling funds deposited by customers on the platform to use them without their permission in risky financial operations, mainly in cryptocurrencies, through another company, Alameda Research.

Arrested at the end of December in Nassau (Bahamas), then extradited to the United States, he was charged with fraud and criminal association by a federal judge in New York and released on bail. He risks several decades in prison.

In addition to the 5 billion mentioned on Wednesday, FTX indicated that it had control over “illiquid” assets in cryptocurrencies, that is, those that cannot be sold in the short term. Specifically, this capital is denominated in highly volatile digital currencies and “cannot be sold without affecting the corresponding market” and lowering the value of this currency, explained Andrew Dietderich. Added to this are the assets recovered by the liquidators of FTX in the Bahamas, whose value at the end of 2022 was estimated at $170 million.

Future compensation

After an initial imbroglio, the new leaders of FTX and the Bahamian liquidators have reached an agreement which stipulates that all sums recovered in the US and the Bahamas will be used to compensate customers and creditors.

With the creditors’ agreement, FTX initiated the sale of four group entities, including its Japanese subsidiary FTX Japan and a platform for trading financial derivatives based on cryptocurrencies, LedgerX.

FTX’s new executives are also preparing to divest more than 300 “non-strategic” investments with a combined book value of more than $4.6 billion, according to Sullivan & Cromwell’s Andrew Dietderich. The former officials of FTX and Alameda are in particular accused of having used part of the embezzled funds to buy real estate, mainly in the Bahamas.

Leave a Comment