AIBC

Creditor meeting reveals FTX has over $1 billion in cash on hand

Posted:Dec 21, 2022 15:23 Category: Americas , Blockchain , Crypto , Posted by AIBC Group

FTX executives are attempting to regain control of hundreds of millions of dollars in cash from various bank accounts as they seek to resolve the exchange’s precarious position in the wake of fraud allegations against former CEO Sam Bankman-Fried.

Following Bankman Fried’s resignation, new management took up the job on Nov.11, headed by John J. Ray who managed the reorganisation of Enron back in 2001. He told a procedural hearing on Tuesday last week that the exchange clawed back about $1 billion in identified assets. 

The firm located about $720 million in assets, which have yet to be consolidated in US financial institutions authorised by the US Department of Justice, per a Coindesk report.

An additional $500 million is currently held in US institutions. Original reports placed the FTX hole at anywhere between $10 billion and $50 billion at the height of the catastrophe.

Speaking under oath, FTX’s new chief financial officer, Mary Cilia said in the bankruptcy proceeding: “We are reaching out to all of those banks and changing the signatories on the accounts so that we can get access to the accounts and move the cash as much as we can to authorized depository institutions.”

FTX funds spread globally

About $130 million in cash is locked in Japan, said Cilia, where regulators have bound funds for local clients. Another $6 million is being held to cover operational costs such as payrolls. The remaining $423 million at unauthorised US institutions is at a single broker, for the most part, though Cilia declined to identify the broker in question. A further $485 million is in an authorised deposit institution.

As of the hearing, there are “ongoing efforts” to identify the firm’s remaining international crypto assets, and shift them to cold storage via providers such as Bitgo, per senior FTX director Steve Coverick.

The Chapter 11 bankruptcy hearings aim to roll up the exchange, but have been made complex and cumbersome due to poor governance and record-keeping under the now imprisoned Sam Bankman Fried. Management were having to review terms and conditions that were stored sporadically in various places such as Google Drive and Slack, Coverick added.

FTX has yet to file a financial statement of assets, or reveal details of its finances required under US bankruptcy law. Cilia estimates this information will be available in April as the company attempts to find out how many employees were on the payroll worldwide, and how much cash was withdrawn in the leadup to the bankruptcy. The estimated number of employees is 220. 

Bankman-Fried has signed extradition papers to the US, where he will face eight criminal violations, ranging from wire fraud to money laundering to conspiracy to commit fraud.

 

Related Posts