‘Liquid’ assets from the bankrupt FTX exchange have been retrieved for $5 billion
Liquidators informed a U.S. bankruptcy judge in Delaware on Wednesday that the defunct cryptocurrency exchange FTX has recovered at least $5 billion in liquid assets, including cryptocurrencies and equities. According to Adam Landis, an attorney for the FTX bankruptcy team, the US$5 billion does not include cryptocurrency held in the Securities Commission of the Bahamas’ possession. The assets that the Bahamian government is in charge of are said to be very volatile and should be worth roughly $170 million US by the end of 2022, according to Landis. Sam Bankman-Fried, the former CEO of FTX, who is currently facing numerous charges of fraud and theft of customer deposits, resided in and ran many of FTX’s subsidiaries from the Bahamas, and American and Bahamian-based liquidators had previously argued over who should have jurisdiction over the exchange’s foreign assets. Before its collapse in November of the previous year, FTX had a $32 billion market value. FTX administrators, according to Landis, have now reached a “cooperation agreement” with the interim liquidators in the Bahamas as well as with the liquidators in Australia, where the only other FTX businesses are involved in separate bankruptcy procedures. “That agreement’s basic tenet is straightforward: as long as clients receive $1, it doesn’t matter who collects it,” he continued. Landis said that there were preparations in place “to monetize” more than 300 other non-strategic FTX investments with a book value of more than US$4.6 billion.
The legal team for FTX pointed out that a portion of the company’s illiquid cryptocurrencies is not included in the $5 billion in fund assets. The size of the company’s cryptocurrency holdings, according to Landis, means that selling some of the digital assets would significantly lower their market value. Early in November, it was discovered that FTX’s brokerage arm, Alameda Research, held a significant quantity of the exchange’s cryptocurrency token, sparking worries about commingled assets and liquidity problems. Almeda and FTX were both formed by Bankman-Fried, 30, who also served as its principal owner. He has pled not guilty to the accusations against him and was extradited to the United States on December 21.
On a US$250 million bail bond, he is currently under house arrest at his parents’ mansion in California. Bankman-Fried was replaced as FTX’s CEO by John J. Ray after the conglomerate filed for bankruptcy on November 11. In a prior deposition, Ray claimed that there were at least $8 billion in missing client assets. The hearing was held a week after federal prosecutors made a move to confiscate shares of financial services business Robinhood linked to FTX valued at over US$450 million as part of their ongoing investigation into Bankman-Fried.
U.S. Bankruptcy Judge John Dorsey supported the motion made by FTX’s legal counsel to hide the names of its roughly 9 million customers and creditors from the public during the hearing. The judge did not grant FTX’s attorneys’ request for a six-month sealing period; instead, he granted a three-month seal on the identities.