FTX Recovers $5bn In ‘Liquid’ Assets

Attorneys for the collapsed cryptocurrency exchange FTX told a Delaware bankruptcy court they have located more than $5bn (£4.1bn) of assets.

The recovered ‘liquid’ assets includes cash, crypto and securities, and it comes after FTX filed for Chapter 11 bankruptcy protection last November when a multi-billion dollar hole was found in its balance sheet – amid reports of financial impropriety.

The crypto exchange was once valued at $32 billion and former CEO and FTX co-founder Sam Bankman-Fried was arrested and extradited to the United States from the Bahamas.

FTX collapse

Then just before Christmas Bankman-Fried was freed on a $250m bail, but was ordered to remain under strict supervision at his parents’ home in Palo Alto, California, and wear an ankle bracelet.

Last week he pleaded not guilty in a New York courtroom, where he faces eight criminal counts, including wire fraud and money laundering conspiracy.

His trial is scheduled for 2 October.

US prosecutors have already secured guilty pleas from two former top associates of Bankman-Fried’s – former Alameda chief executive Caroline Ellison and former FTX chief technology officer Gary Wang – who are co-operating with prosecutors and may testify at trial.

FTX’s new CEO, John J. Ray, has previously attested that at least $8 billion of customer assets were unaccounted for in the “worst” case of corporate control he’d ever seen.

Recovered assets

But during a FTX bankruptcy hearing in a Delaware court on Wednesday, FTX attorneys were quoted by CNBC as saying the platform recovered over $5 billion worth of liquid assets, including cash and digital assets.

The news comes after federal prosecutors announced plans to seize at least $500 million worth of FTX-connected assets as part of their ongoing prosecution of Sam Bankman-Fried.

The recovery of over 5 billion dollars of cash, liquid cryptocurrency and liquid investment securities will be welcome news to FTX customers, but the $5bn recovered figure does not include any illiquid cryptocurrency assets, FTX attorney Adam Landis reportedly told the court.

He reportedly said the company’s holdings are so large that selling them would substantially affect the market, driving down their value.

FTX’s collapse was related to, among other things, a failure to correctly mark illiquid assets to market, CNBC reported.

FTX executives, including Bankman-Fried and Alameda’s CEO Caroline Ellison, borrowed against the value of the FTX-issued token FTT.

Alameda controlled the vast majority of FTT coins circulating, similar to a publicly traded companies float, and could not have liquidated their position at full book value.

Another FTX attorney, Andy Dietderich, reportedly said that the recovered funds do not include assets seized by the Securities Commission of the Bahamas, where FTX was based and where Bankman-Fried was living at the time of his arrest.