Bankrupt crypto exchange FTX has recovered $7.3 billion in assets
April 12 (Reuters) – Bankrupt crypto exchange FTX has recovered more than $7.3 billion in cash and liquid crypto assets, an increase of more than $800 million since January, the company’s lawyer said on Wednesday during a U.S. bankruptcy court hearing in Delaware.
FTX attorney Andy Dietderich said the company is beginning to think about its future after months of efforts devoted to pooling resources and figuring out what went wrong under the leadership of indicted ex-founder Sam Bankman-Fried. Bankman-Fried has pleaded not guilty.
“The situation has stabilized and the landfill fire is out,” Dietderich said.
FTX has benefited from a recent surge in crypto prices, Dietderich said. Its total mining would be valued at $6.2 billion based on crypto prices as of November 2022, when it filed for bankruptcy after traders withdrew $6 billion from the platform in three days and rival exchange Binance abandoned a bailout deal.
FTX’s new CEO John Ray has detailed improper fund transfers and poor accounting at the collapsed crypto exchange, describing it as a “complete failure” of controls.
Looking to the future, FTX is negotiating with stakeholders on options to restart its crypto exchange, and it may make a decision on that in the current quarter, Dietderich said.
He gave few details on what a reboot might mean for FTX customers whose crypto deposits have been locked up during the bankruptcy case.
So far, FTX customers in Japan have been the only ones able to withdraw money so far, due to the country’s relatively strong crypto regulations, Dietderich said.
FTX would need significant capital to restart its crypto exchange because the existing customer interface had little connection to the movement of money behind the scenes, the lawyer said.
“The app worked beautifully, but in truth it was a facade,” Dietderich said.
It is not clear whether FTX will use its own funds to restart the exchange, rather than using the money to repay customers, Dietderich said. Restarting the exchange may require external financing or a sale of the exchange’s assets.
FTX is also working on a preliminary Chapter 11 plan that would offer the company a path out of bankruptcy, Dietderich said.
FTX intends to submit that plan by July, but it acknowledged that many details needed to be worked out as creditors fight over 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. Contrary to Bankman-Fried’s plea of not guilty, the former members of his inner circle have pleaded guilty and agreed to cooperate with prosecutors.
Reporting by Dietrich Knauth Editing by Chris Reese, Alexia Garamfalvi and Anna Driver
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