Lawyers Find Billions While Hunting for FTX Assets in Crypto and Cash

Facebooktwitterredditpinterestlinkedinmailby feather

Bitcoin's price up again.The FTX trial is locked in and new reports and evidence about Sam Bankman-Fried’s schemes are emerging all the time. Just a couple of months after FTX’s demise, lawyers have begun to identify the crypto exchange’s assets. In a new reveal, lawyers from Sullivan & Cromwell have identified a total of $5.5 billion of assets in cash and crypto tucked away in many parts of the company. Some were found held in customer accounts.

All that money is supposed to be used to repay lenders and customers who were wiped off the map when the crypto exchange filed for bankruptcy. And that’s just the beginning – there’s a lot of money still owed, and we’re yet to see what new assets emerge and how they will be processed.

Untangling Evidence and Recouping Assets

The trial has reached the point of presenting evidence that there’s still a lot of money locked up in FTX’s assets. The massive scope of the challenge to untangle and recoup assets is becoming more and more clear. Sam Bankman-Fried and his crypto exchange FTX has invested in an assortment of assets in three years.

Some of the money went to new cryptocurrencies. The rest was invested in all kinds of digital companies. Nearly $2 billion out of the $5.5 found was in cash and on FTX’s books. A total of $3.5 billion was in crypto assets. Most of that money was in Bitcoin, but many coins of questionable value were also invested in. This stash of digital currencies can be turned into cash, as all those coins can easily be traded.

Many of the seized assets were in stablecoins, although more than 100 lesser-known coins were also found. Millions of dollars were poured into these, and their value may not stand in the long run. This is one of the problems that were uncovered when FTX feel. The money invested by its customers was reinvested in questionable coins and assets, including half a billion in the company’s coin, FTT.

These ‘illiquid coins’ will be much tougher to convert to cash, but on the positive side, their amount is smaller than Bitcoin.

Fewer Digital Assets Than Hoped

Despite the immense value of the seized assets, the lawyers said the amount of money found during the hunt was smaller than they hoped for. When FTX collapsed, reports said that around $8 billion is missing from customer accounts. There were nine million accounts opened at the exchange, and while some were empty, others were loaded.

The money owned to lenders hasn’t been disclosed. The task of discovering how much money is owned and what’s likely to be recovered and paid back will certainly change all the time. FTX didn’t keep complete financial records, with Bankman-Fried essentially treating all customer deposits as piggy banks. He could easily use the money as he saw fit, so it’s no wonder that he was a billionaire in his early thirties.

This was a massive and years long fraud that shook the crypto industry to the core. We’re aching to see what happens next, but don’t expect all the money to be recovered and paid back.

January 18, 2023: • No Comments

Comments are closed.