FTX recovers $5 billion in cash and crypto to repay customers
Collapsed cryptocurrency exchange FTX says it has recovered more than $5 billion in cash and crypto assets that it may be able to sell to help repay customers and investors, a lawyer for the company told a bankruptcy court in Delaware on Wednesday.
The company’s advisers have identified a significant amount of crypto that will be more difficult to sell without driving down the market price of those digital tokens, said FTX attorney Andrew Dietderich. The company is also trying to sell other “non-strategic investments” made by FTX that have a book value of $4.6 billion, he said.
It’s not yet clear how much FTX’s creditors will face as the company’s advisers continue to work to salvage what they can from the crypto giant’s shock implosion in November. But the company, once one of the world’s largest cryptocurrency exchanges, has identified more than 9 million customer accounts, Dietderich said, suggesting there will be an incredibly long line of people looking to fill.
Federal regulators have estimated that FTX’s customer losses exceed $8 billion. John J. Ray III, the corporate shutdown expert who now runs the company, told lawmakers last month that the company won’t be able to recoup all of its losses and expects the process to take “months, not weeks.”
FTX co-founder Sam Bankman-Fried pleaded not guilty to eight felony counts of fraud and money laundering in federal court in Manhattan last week. Federal prosecutors and regulators have accused him of orchestrating a years-long scheme to defraud the company’s clients by diverting their deposits to his affiliated investment firm, Alameda Research, and then using the funds as a personal piggy bank.
“We know what Alameda did with the money,” Dietderich told the bankruptcy court Wednesday. “She bought airplanes, houses, threw parties, made political donations. It provided personal loans to its founders. It sponsored the FTX Arena in Miami, a Formula 1 team, League of Legends, Coachella and many other businesses, events and personalities.”
Bankman-Fried and his inner circle also made risky bets on cryptocurrencies, “often without success,” Dietderich said, and invested in a variety of businesses. “We know that all of this has left a shortfall in value to repay customers and creditors,” he said. “The amount of the shortfall is not yet clear. It will depend on the size of the claim pool and our recovery efforts.”