FTX Bankruptcy Lawyers Reveal How Much They Have Clawed Back For Defrauded Investors
Fatih Aktas/Anadolu Agency via Getty Images

Attorneys managing the bankruptcy of defunct cryptocurrency exchange FTX announced that they have recovered some $5 billion in assets to repay defrauded customers and investors.

Former FTX CEO Sam Bankman-Fried garnered controversy after users learned that he commingled funds between his exchange platform and Alameda Research, a trading firm he also controls, losing billions’ worth of assets as customers rushed to withdraw their balances. Adam Landis, an attorney working to recover funds, said that deposits were used to purchase lavish amenities and otherwise improperly enrich the company’s founders.

“We know what Alameda did with the money. It bought planes, houses, threw parties, made political donations. It made personal loans to its founders. It sponsored the FTX Arena in Miami, a Formula One team, the League of Legends, Coachella and many other businesses, events and personalities,” Landis remarked during a Wednesday hearing, according to a report from Coinbase. “The amount of the shortfall is not yet clear. It will depend on the size of the claims pool and our recovery efforts. But every week we come closer to completing the work necessary to estimate recoveries for the purposes of a plan of reorganization.”

The recovered funds came in the forms of cash, liquid cryptocurrency, and liquid investment securities. Landis added that the company also has control of illiquid cryptocurrency reserves “where our holdings are so large relative to the total supply that our positions cannot be sold without substantially affecting the market for the token.”

Lawyers for the company could only find $1 billion of assets as of last month. The company said in bankruptcy filings that the total amount missing was between $1 billion and $10 billion. Authorities in the Bahamas, where FTX and other companies led by Bankman-Fried were headquartered, seized $3.5 billion of assets in the days after the company’s collapse.

Damien Williams, the United States Attorney for the Southern District of New York, indicted Bankman-Fried of conspiracy to commit wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering, and conspiracy to defraud the Federal Election Commission and commit campaign finance violations, according to a press release from the Justice Department. The entrepreneur, who could spend as many as 115 years in prison, has pleaded not guilty even as other former executives admit their guilt.

Bankman-Fried has been released on a $250 million bond and is currently permitted to stay at his parents’ home in northern California. United States District Judge Lewis Kaplan is allowing Bankman-Fried to conceal the names and addresses of the individuals who secured his bond.

The collapse of FTX produced hesitance among customers and investors toward other firms in the nascent cryptocurrency sector. BlockFi, a lending platform, filed for bankruptcy days after FTX was rendered insolvent, while companies such as Genesis indicated the looming possibility of bankruptcy. Other entities, such as Voyager and Celsius had already declared bankruptcy months earlier amid a bear market in the digital asset space. Coinbase announced plans this week to dismiss roughly 20% of its employees for the second time in seven months.

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The Daily Wire   >  Read   >  FTX Bankruptcy Lawyers Reveal How Much They Have Clawed Back For Defrauded Investors