Collapsed crypto exchange FTX recovers $5 billion worth of assets
FTX, the cryptocurrency exchange that came crashing down in just a week in November last year, has now recovered assets worth $5 billion, its attorney told a U.S.court,
BBC reported.
Valued at over $32 billion just a year ago, the crypto exchange, with its head office in the Bahamas, faced a liquidity crunch.The founder, CEO Sam Bankman-Fried (SBF), filed for bankruptcy protection on November 11.
As the matter was probed further, it came to the notice of prosecutors that the crypto exchange’s liquidity crunch was the result of its own actions in the past, where SBF’s investing firm Alameda Research had tapped into customer deposits at FTX to make some of its own investments that went south.
The fraud at FTX
At first, it might appear that FTX’s troubles might have been due to a few deals gone wrong.However, as more details have emerged, there are multiple episodes of wrongful acts that were conducted at the company, all well known to the top brass.
In December last year, Interesting Engineering reported how the
software code at FTX had been modified to sell off all Alameda Research assets in case the former filed for bankruptcy.Later it also became known that under the instructions of SBF, executives at FTX were actively hiding liabilities under fake accounts.As much as $8 billion in Alameda’s liabilities were hidden in an account referred to by SBF as “our Korean friend’s account.”
SBF, who has pleaded not guilty to the charges of fraud at FTX, was released on a $250 million bail and is not allowed to leave his parent’s home in California.
He has maintained that he didn’t do this knowingly, even as prosecutors haven’t yet been able to estimate the extent of the losses that FTX customers are facing.
Assets are recovered, but the damage is done
Now, an attorney for the firm has said that more than $5 billion of the FTX’s assets have been recovered in “cash, illiquid cryptocurrency, and liquid investment securities,” BBC said in its report.
The attorney also added that recovered funds were not part of the assets seized by the Securities Commission of the Bahamas, where FTX was headquartered, and SBF was arrested before being extradited to the U.S.
While these assets could be used to recoup the losses faced by investors in the crypto exchange, FTX investors and customers have not been listed in the court hearings, barring American football star Tom Brady, his wife, Giselle Bündchen, and New England Patriots owner Robert Kraft, the BBC report added.
Apart from financial losses faced by customers, the episode has also hit the reputation of the cryptocurrency industry, which has already been on the low down in the past year.
FTX’s collapse has also impacted investors at other crypto exchanges, such as Gemini, who had
invested in financial products linked to the now-collapsed crypto exchange.
Surviving companies in the industry can expect tough scrutiny from prosecutors as well as financial regulators in the near future, which could bring skeletons out of the closet and tougher regulations to conform to in the market.The real impact of the FTX’s collapse is only beginning to unravel now.
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