Status: 01/12/2023 08:26 a.m
Cash, cryptocurrency and securities: Lawyers have discovered assets worth five billion dollars at the bankrupt crypto exchange FTX. This is a glimmer of hope for customers and creditors.
At the insolvent crypto exchange FTX, lawyers have secured remaining assets totaling five billion dollars (4.64 billion euros). That sum was found in the form of “cash, liquid cryptocurrency and liquid securities,” said Andrew Dietderich, a lawyer dealing with the bankruptcy, in a Delaware court yesterday.
The company is also “on track” to sell other assets with a book value of $4.6 billion, according to the attorney for the law firm Sullivan & Cromwel. However, it is still too early to say how much FTX will have to raise to compensate its former customers, who lost their funds practically overnight due to the bankruptcy. In addition, the company’s balance sheets are not considered very reliable.
Customer Class Action
Nevertheless, the more than nine million identified FTX customers are now hoping for payments from the bankruptcy estate of the collapsed crypto exchange. At the end of December, they filed a class action lawsuit against the bankrupt company. Insolvency administrators in the Bahamas and Antigua and administrators of the bankruptcy estate of Blockfi, another insolvent crypto company, are already fighting over the remaining assets.
The plaintiffs want to ensure that traceable customer assets are not attributed to either the bankruptcy estate of FTX or the former crypto hedge fund Almeda. However, if the court finds that customer funds are owned by crypto companies, retail customers will claim a priority right to repayment over other creditors.
Crypto companies are lightly regulated and are often based outside of the United States. Therefore, deposits are not guaranteed as with US banks and brokers. This raises the question of whether the company or the customers own the deposited funds.
FTX founder rejects allegations
FTX had slipped into bankruptcy in November after rumors of irregularities, rocking the crypto world. The firm’s business construct collapsed when it was revealed that the platform was mainly holding its client funds in a specially issued cryptocurrency with no equivalent. Many customers lost confidence and wanted to withdraw funds on a large scale.
However, the second largest trading platform for cryptocurrencies at times did not pay out billions in customer funds. For a long time, FTX founder Bankman-Fried was considered an exception in the industry. Just a few months ago, he was celebrated on the front pages of US business media such as “Fortune”.
Bankman-Fried is said to have secretly siphoned off $10 billion. He was accused of fraud and money laundering in the United States, but rejects the allegations. The 30-year-old was arrested in the Bahamas in December and extradited to the United States.