- FTX valued a year ago at $32 billion
- Over $8 Billion in FTX Client Funds Missing
- Plan for the sale of FTX subsidiaries presented in court
NEW YORK/WILMINGTON, Del., Jan 11 (Reuters) – Crypto exchange FTX has recovered more than $5 billion in liquid assets, but the extent of client losses in the collapse of the company founded by Sam is still unknown. Bankman-Fried, according to a lawyer. for the company told a US bankruptcy court on Wednesday.
The company, which was valued a year ago at $32 billion, filed for bankruptcy in November and indicted US prosecutors Bankman-Fried of orchestrating an “epic” fraud that may have cost investors, customers and lenders billions of dollars.
“We have located over $5 billion in cash, liquid cryptocurrencies and liquid investment securities,” Andy Dietderich, an attorney for FTX, told US bankruptcy judge John Dorsey in Delaware at the start of the hearing on Wednesday.
Dietderich also said the company plans to sell non-strategic investments that had a book value of $4.6 billion.
However, Dietderich said the legal team is still working to create accurate internal records and the actual customer shortfall is unknown. The US Commodity Futures Trading Commission has estimated that more than $8 billion is missing client funds.
Dietderich said the $5 billion recovered does not include assets seized by the Bahamas Securities and Exchange Commission, where the company was headquartered and Bankman-Fried resided.
FTX’s lawyer estimated that the seized assets were worth as little as $170 million, while Bahamian authorities estimated the figure to be as high as $3.5 billion. The seized assets are largely made up of FTX’s illiquid proprietary FTT token, which is highly volatile in price, Dietderich said.
SALE OF ASSETS
FTX could raise additional funds in the coming months for the benefit of clients after Dorsey approved FTX’s request for procedures to explore affiliate sales at Wednesday’s hearing.
The affiliates — LedgerX, Embed, FTX Japan, and FTX Europe — are relatively independent from the broader FTX group, each having their own segregated client accounts and separate management teams, according to FTX court documents.
The cryptocurrency exchange has said it is not committed to selling either company, but has received dozens of unsolicited offers and plans to hold auctions starting next month.
The US Trustee, a government bankruptcy watchdog, opposite sell affiliates before the extent of FTX’s alleged fraud is fully investigated.
In part to preserve the value of its businesses, FTX also sought Dorsey’s approval to keep 9 million FTX client names secret. The company has said that privacy is necessary to prevent rivals from stealing from users, but also to prevent identity theft and comply with privacy laws.
Dorsey allowed the names to remain secret for only three months, not six months as FTX wanted.
“The difficulty here is that I don’t know who is a customer and who is not,” Dorsey said. He set a hearing for Jan. 20 to discuss how FTX will distinguish between clients and said he wants FTX to return in three months to further explain the risk of identity theft if client names are made public.
Media companies and the US Trustee had argued that US bankruptcy law requires disclosure of creditor details to ensure transparency and fairness.
In addition to selling affiliates, a company lawyer said Wednesday that FTX will end its $135 million, 19-year endorsement deal with the NBA’s Miami Heat and a $89 million, 7-year deal with the video game League. of Legends.
FTX Founder, bankman-fried, 30, was charged with two counts of wire fraud and six counts of conspiracy last month in Manhattan federal court for allegedly stealing client deposits to pay off debts from his hedge fund, Alameda Research, and lying to investors. of capital on the financial situation of FTX. He has pleaded not guilty.
Bankman-Fried has acknowledged shortcomings in FTX’s risk management practices, but the former billionaire has said he does not believe he is criminally liable.
In addition to the loss of client funds, the company’s collapse likely also wiped out equity investors.
Some of those investors were revealed in a court filing Monday, including football star Tom Brady, Brady’s ex-wife, supermodel Gisele Bündchen, and New England Patriots owner Robert Kraft.
Reporting by Dietrich Knauth in New York and Tom Hals in Wilmington, Del.; Edited by Alexia Garamfalvi, Mark Porter, Matthew Lewis, and Anna Driver
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