Bankrupt crypto exchange FTX has recovered over $9b in assets
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Bankrupt exchange FTX has benefited from a recent rise in crypto prices.
PHOTO: REUTERS
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NEW YORK – Bankrupt crypto exchange FTX has recovered more than US$7.3 billion (S$9.7 billion) in cash and liquid crypto assets, an increase of more than US$800 million since January,
FTX attorney Andy Dietderich said the company is starting to think about its future after months of effort devoted to collecting resources and figuring out what went wrong under the leadership of its indicted founder Sam Bankman-Fried.
Bankman-Fried has pleaded not guilty.
“The situation has stabilised, and the dumpster fire is out,” Mr Dietderich said.
FTX has benefited from a recent rise in crypto prices, Mr Dietderich said. Its total recovery would be valued at US$6.2 billion based on crypto prices from November 2022, when it filed for bankruptcy
FTX’s new chief executive officer John Ray III has detailed improper fund transfers and poor accounting at the collapsed crypto exchange, describing it as a “complete failure” of controls.
As it looks to the future, FTX is negotiating with stakeholders about options for restarting its crypto exchange, and it may make a decision on that in the current quarter, Mr Dietderich said.
He offered few details on what a reboot might mean for FTX customers whose crypto deposits have been locked up during the bankruptcy case.
FTX customers in Japan have been the only ones able to withdraw any funds so far because of that country’s relatively strong crypto regulations, Mr Dietderich added.
FTX will need significant capital to restart its crypto exchange because the existing customer interface has little connection to the movement of money behind the scenes, he said.
“The app worked beautifully but in truth, it was a facade,” Mr Dietderich said.
It is not clear whether FTX should use its own funds to restart the exchange, rather than using the money to repay customers, Mr Dietderich said. Restarting the exchange may require outside funding or a sale of the exchange’s assets.
FTX is also working on a preliminary Chapter 11 plan that will offer the company a path out of bankruptcy, Mr Dietderich said.
It intends to file that plan by July, but acknowledges that many details will have to be worked out as creditors fight for their share of the company’s assets. FTX does not expect any Chapter 11 plan to be approved before the second quarter of 2024.
Bankman-Fried and several company insiders have been indicted on fraud charges for their role in the company’s collapse. In contrast to Bankman-Fried’s not guilty plea, the former members of his inner circle have pleaded guilty and agreed to cooperate with prosecutors. REUTERS
