The new management at FTX has found cash belonging to the bankrupt crypto company, bringing its cash reserves to a total of $1.24bn (£1.04bn), the Financial Times has reported .The cryptocurrency exchange had previously estimated after it fell into bankrupcty that there was $564m (£474m) in bank balances.After FTX’s founder, Sam Bankman-Fried, resigned as CEO, a restructuring expert, John Ray III taking over as the new CEO.Ray has criticised FTX’s former CEO and management team for a “complete absence of trustworthy financial information”.Earlier Bankman-Fried had explained to investors that the company had a shortfall of $8bn (£7.02bn) but needed $4bn (£3.5bn) to remain solvent, an FTX investor had told Bloomberg just days before the Chapter 11 bankruptcy filing on 11 November 2022.Only a year ago, FTX, which operates the ftx token (FTT) as part of its ecosystem, enjoyed a revenue increase of more than 1,000%.
Revenue jumped from $89m in 2020 to $1.02bn in 2021, according to leaked FTX internal financial documents seen by CNBC in August 2022.
Additionally, FTX’s operating income was $272m, up from $14m in 2020, and its net income rose from $17m in 2020 to $388m in 2021.BTC to USD What went wrong? In the first quarter of 2022, FTX achieved $270m in revenue, after which a crypto bear market set in and put the whole sector under intense pressure.Numerous crypto firms filed for bankruptcy, such as the decentralised finance (DeFi) platform Celsius Network (CEL) in July 2022.
This was followed by the collapse of the Singapore crypto hedge fund Three Arrows Capital (3AC), which filed for bankruptcy in July, and the crypto lender Voyager Digital (VGX), which also went bankrupt in July.It was a “liquidity crunch”, confirmed by Bankman-Fried on Twitter, that played a pivotal role in bringing down FTX as well.
Binance offered a lifeline On 8 November 2022, Binance announced it was buying FTX.Changpeng Zhao, the founder and CEO of Binance, said on Twitter that FTX had asked it for help because of a “significant liquidity crunch”.
Zhao said that Binance would fully acquire FTX, but not FTX.US.Bankman-Fried stressed that FTX.US was a separate company and should not be impacted by the problems at FTX.However, Zhao’s deal included the “discretion to pull out from the deal at any time”.Binance did just that 24 hours later, after due diligence checks, news reports of mishandled customer funds, and alleged US agency investigations.In a series of tweets, Binance said: “In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help.” Jeremy Allaire, co-founder and CEO of Circle, a peer-to-peer payments technology company that issues the usd coin (USDC) stablecoin, commenting on the FTX situation, said: “It is disappointing that a technology that was spawned in reaction to the Lehman Bros moment of 2008 has given rise to its own version of the same.” FTT to USD Could Tron founder step in to help? Justin Sun, the founder of the blockchain-based platform Tron (TRX), has revealed that he wants to stand behind all TRX and Huobi Token (HT) holders on FTX.Sun said: “We are putting together a solution with FTX to initiate a pathway forward.The ongoing liquidity crunch, despite short term in nature, is harmful to the industry development and investors alike.
“Ark building is well under way, the modern crypto voyage for FTX users to weather the crypto storm.” Sun added that Tron was waiting on “standby” and was backed by Huobi, a crypto exchange in this mission.Salary payments resume Under Ray’s management it was announced that FTX and its affiliates will resume salary payments to its workers worldwide, Reuters reported.That came almost three weeks after the company filed for bankruptcy.
Bankman-Fried down to last $100,000 Despite previous estimates by Bloomberg that put his personal wealth at $16bn in early November 2022, Bankman-Fried acknowledged he only has $100,000 left in his bank account.The admission came when the former FTX CEO spoke at the New York Times and DealBook summit on 30 November, where he was questioned by Andrew Ross Sorkin.At the start of 2022 that the cryptocurrency derivatives exchange was valued at $32bn after an investor funding round.Bankman-Fried’s parents step in After Bankman-Fried was arrested by the Royal Bahamas Police Force after a “formal notification by the United States”, he has been extradited back to the US.
He has also been formally charged by the US Securities and Exchange Commission.SEC chair Gary Gensler said the “alleged fraud” committed by Bankman-Fried was a “clarion call to crypto platforms that they need to come into compliance with our laws”.Bankman-Fried has now been released on a $250m (£207m) bond package as he awaits a court hearing on the fraud charges.The bond was signed by his parents who have agreed to keep him under house arrest in California where they live as he awaits trial.Bankman-Fried’s parents posted the equity in their home as assurance for Bankman-Fried’s return to court..