»FTX claims $5B recovery, but customer losses unclear«
According to an attorney for the insolvent firm created by Sam Bankman-Fried, the amount of client losses in the collapse of the cryptocurrency exchange FTX, which has recovered more than $5 billion, is still unclear.
The $32 billion firm filed for bankruptcy in November, and US authorities charged Bankman-Fried with organizing a “epic” fraud that may have cost investors, clients, and lenders billions of dollars. The corporation had been valued at $32 billion a year earlier.
At the beginning of the hearing on Wednesday, Andy Dietderich, an attorney representing FTX, said, “We have identified almost $5 billion in cash, liquid cryptocurrencies, and liquid investment assets.”
Additionally, according to Dietderich, the business intends to divest non-strategic assets with a $4.6 billion book value.
Dietderich said that the legal team is still attempting to establish proper internal records and that it is still unclear how many customers were really shortchanged. According to the Commodities Futures Trading Commission, there may be more than $8 billion in missing client funds.
The $5 billion collected, according to Dietderich, excludes assets confiscated by the Bahamas’ Securities Commission, where Bankman-Fried was housed.
While Bahamian officials assessed the value of the confiscated assets as high as $3.5 billion, FTX’s counsel estimated that they were only worth as low as $170 million. According to Dietderich, FTX’s proprietary and illiquid FTT coin, which has a very erratic pricing, makes up the majority of the confiscated assets.
affiliates for sale
On Wednesday, FTX’s legal team appeared in court to request authorisation for the sale processes for affiliates LedgerX, Embed, FTX Japan, and FTX Europe.
Additionally, FTX is requesting permission from Delaware’s US Bankruptcy Judge John Dorsey to keep customer identities confidential for at least six months.
Sam Bankman-Fried, the 30-year-old founder of FTX, was charged last month in federal court in Manhattan with two counts of wire fraud and six counts of conspiracy. He is accused of stealing customer deposits to pay off debts from his hedge fund, Alameda Research, and deceiving equity investors about the state of FTX’s finances. He entered a not-guilty plea.
According to FTX court documents, the four businesses it plans to sell are somewhat autonomous from the larger FTX company and each has its own distinct management groups and customer accounts.
The cryptocurrency exchange has said that although it is not obligated to sell any of the businesses, it has received several unsolicited bids and intends to host auctions starting next month.
Selling the affiliates before the scope of the suspected FTX fraud is thoroughly probed has been challenged by the US Trustee, a bankruptcy inspector that is a member of the Department of Justice.
In addition to selling affiliates, FTX will terminate its seven-year sponsorship agreement with the video game League of Legends, which began in 2021, according to a company lawyer on Wednesday.
Bankman-Fried has admitted that FTX’s risk management procedures need improvement, but the former millionaire has said he does not think he is legally responsible.
The company’s demise not only resulted in the loss of consumer monies but also probably eliminated stock investors.
Tom Brady, the renowned quarterback, his ex-wife, the supermodel Gisele Bündchen, and Robert Kraft, the owner of the New England Patriots, are among the investors who were named in a court filing on Monday.
»FTX claims $5B recovery, but customer losses unclear«