Liquidators at US-based cryptocurrency exchange FTX said on Wednesday they had recovered more than $5 billion in 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 convertible into cash, one of the group’s lawyers, Andrew Dietderich, explained during the court hearing. eastern United States.
Risky financial transactions
In a filing in early November asking for FTX to be included in the bankruptcy system, the group estimated its liability at between $10 billion and $50 billion. This includes the frozen assets of the platform’s clients, which the lawyer said included more than 9 million accounts, as well as FTX’s debts. Former FTX CEO Sam Bankman-Fried is accused of embezzling funds deposited by customers on the platform in order to use them without their permission in risky financial transactions, 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 complicity by a federal judge in New York. He faces several decades in prison. In addition to the $5 billion mentioned on Wednesday, FTX indicated that it has “illiquid” crypto holdings, meaning that it cannot be sold in the short term. Specifically, this capital is denominated in highly volatile digital currencies and “cannot be traded without damaging the relevant market” and reducing the value of this currency, explained Andrew Dietderich.
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Added to this are the assets seized by the FTX liquidators in the Bahamas, which were valued at $170 million at the end of 2022. After initial confusion, the new FTX leaders and the Bahamian liquidators reached an agreement whereby all amounts recovered in the US and the Bahamas would be used to compensate customers and creditors. With the consent of creditors, FTX initiated the sale of four group companies, including its Japanese subsidiary FTX Japan and cryptocurrency derivatives trading platform LedgerX.
The new FTX executives are also preparing to divest more than 300 “non-strategic” investments with a total book value of more than $4.6 billion, according to Sullivan & Cromwell’s Andrew Dietderich. Former FTX and Alameda officials, in particular, are accused of using some of the embezzled funds to buy real estate, mostly in the Bahamas.
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