When cryptocurrency exchange FTX suddenly collapsed, the polygamous group of young “executives” told everyone they were totally broke. On Wednesday, bankruptcy lawyers for the controversial company offered a small ray of sunshine to over 9 million unhappy customers. The still operating exchange “says it has recovered more than $5 billion worth of cash and crypto assets it may be able to sell.” They aren’t saying where they found it but it was probably under the sofa cushions in their Bahamas penthouse. Sam Bankman-Fried and his friends threw thousands around on lunch and didn’t bother to keep track of the change.
FTX ‘finds’ 5 billion
Cryptocurrency exchange FTX imploded due to alleged fraud and mismanagement in November but didn’t collapse completely. Corporate lawyers are fighting it out in a Delaware bankruptcy court and trying to salvage what they can for the customers who were allegedly ripped off.
Creditors will be forced to take a haircut but how much of a trim is still up in the air.
As Washington Post reports, “company advisers have identified a significant amount of crypto.” There’s a problem. They found a bunch of it. So much that “it will be more difficult to sell without depressing the market price.”
Failed crypto exchange FTX has recovered over $5 bln, attorney says https://t.co/S5hXvWLlfk pic.twitter.com/oqoRikryRB
— Reuters Business (@ReutersBiz) January 11, 2023
According to attorney Andrew Dietderich, they’re “also trying to sell off other ‘nonstrategic investments‘ made by FTX that have a book value of $4.6 billion.”
Analysts note that it’s not “yet clear how much of a shortfall FTX’s creditors will face as company advisers continue working to salvage what they can from the crypto giant’s shocking implosion in November.”
For a while, it was one of the world’s largest cryptocurrency exchanges. Then SBF and his cronies siphoned off the accounts of more than 9 million customers. A whole bunch of that money went straight to Democrat campaign contributions. Millions.
Months not weeks
Federal regulators are estimating that “that FTX customer losses exceed $8 billion.” Anything they can claw back will help, admits John J. Ray III. He’s “the corporate wind-down expert now leading the company.” Last month, he told congress “the company will not be able to recover all of its losses” and expects the process to take “months, not weeks.”
Meanwhile, facing the prospect of more than a hundred years in jail, “FTX co-founder Sam Bankman-Fried pleaded not guilty to eight criminal charges of fraud and money laundering in federal court in Manhattan last week.”
Court documents describe how SBF orchestrated “a years-long scheme to defraud the company’s customers by diverting their deposits to his affiliated investment firm, Alameda Research, and then using the funds as a personal piggy-bank.”
FTX spent nearly $7 million on food in nine months pic.twitter.com/H9mNp3grKf
— Coingrams (@Coingrams) January 9, 2023
Not only that, attorney Dietderich admits, “we know what Alameda did with the money.” FTX execs “bought planes, houses, threw parties, and made political donations.” They also “made personal loans to its founders.”
Besides helping to buy the election for Joe Biden, they “sponsored the FTX Arena in Miami, a Formula 1 team, the League of Legends, Coachella and many other businesses, events and personalities.”
Like all similar schemes, “Bankman-Fried and his inner circle also made risky cryptocurrency bets, often unsuccessfully.” There isn’t enough cash left to pay back what was stolen. “We know all this has left a shortfall in the value to repay customers and creditors. The amount of the shortfall is not yet clear. It will depend on the size of the claims pool and our recovery efforts.“