FTX: Futures trading was available for a plethora of digital assets, including Bitcoin, Ethereum, and Litecoin, on the FTX crypto exchange platform.
Access to other investment products, such as leveraged tokens and options, was made available through the trading platform.
Due to its high liquidity and swift execution times, FTX was prized by institutional investors and professional traders.
After collapsing in the second part of last year, the platform was unable to recover for a time.
Nevertheless, after the bankruptcy in November, the company was able to recoup some of its liquid assets.
The news
The company reclaimed over $5 billion in cash, liquid assets, cryptocurrencies, and securities investments on Wednesday.
There was uncertainty over the amount of money lost, claims the company’s attorney.
FTX filed for Chapter 11 bankruptcy protection late in 2022, when it still had a $32 billion market value.
The founder of the business, Sam Bankman-Fried, was charged with orchestrating an “epic” fraud that, when it collapsed, looted billions of dollars from customers, investors, and lenders.
Recovery
At the hearing on Wednesday, significant assets were retrieved, according to the firm’s attorney Andy Dietderich.
“We have located over $5 billion of cash, liquid cryptocurrencies, and liquid securities,” Dietderich told US bankruptcy Judge John Dorsey.
Dietderich claims that the firm intends to sell non-strategic investments for $4.6 billion.
The attorney also stated that the exact extent of the customer insufficiency is still unknown and that the legal team is currently attempting to gather sufficient internal data.
According to the US Commodities Futures Trading Commission, the amount of money lost was over $8 billion.
According to Andy Dietderich, the $5 billion in assets recovered did not include those held by the Bahamian Securities Commission, where SBF lived and FTX was headquartered.
The FTX attorney evaluated the impounded assets at $170 million compared to the Bahamian authorities’ estimate of $3.5 billion.
The assets comprised the company’s extraordinarily volatile and infrequently traded FTT coin.
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Affiliates sales
Following Dorsey’s approval of their request to review affiliates’ sales during the hearing on Wednesday, FTX may need to raise extra funds in the upcoming months to assist clients.
Affiliates of the FTX group are autonomous legal organizations with their own client accounts and administration.
They include the following:
- Embed
- FTX Europe
- FTX Japan
- LedgerX
FTX reiterated that it had no plans to sell to any groups, despite receiving unsolicited commercial proposals.
They are going to hold bids in February 2023.
Opposition and approval
Before the extent of the FTX scam could be fully understood, the US Trustee Program of the federal government opposed selling the affiliates.
To safeguard the company’s value, FTX asked Dorsey’s approval to keep the names of its 9 million clients private.
The business maintained that user privacy was vital to guarding against clients being taken by rival organizations.
Additionally, it prevents identity theft and follows privacy laws.
The company wanted the names to be kept a secret for six months, but Dorsey only authorized three.
He explainedwhy he made this decision:
“The difficulty here is that I don’t know who’s a customer and who’s not.”
On January 20, John Dorsey arranged a hearing to discuss how the business can set its customers apart.
He ordered that the company come back in three months with further information on the risk of identity theft if the names are made public.
In response, media companies and the US Trustee Program argued that US bankruptcy law mandates creditor information exchange to promote impartiality and transparency.
Other notes
According to a lawyer for FTX, the company will sell its affiliates and cease a 19-year, $135 million sponsorship deal with the Miami Heat.
Additionally, a seven-year, over $89 million contract with the popular video game League of Legends will expire.
SBF
Sam Bankman-Fried was found guilty in December at federal court in Manhattan on two charges of wire fraud and six counts of conspiracy.
He is accused of defrauding customer funds to pay hedge fund Alameda Research’s debts.
The creator of FTX also misled investors about the viability of the company.
Despite the strength of the evidence, Bankman-Fried pleaded not guilty.
Sam Bankman-Fried acknowledged going beyond the risk management guidelines of the company, but he did not think he was criminally liable.
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