FTX debtors identify $5.5 billion of liquid assets in ’Herculean effort’

Beleaguered crypto exchange FTX identified $5.5 billion in liquid assets in what CEO John Ray called a “Herculean effort” to assess the firm’s financial situation.

FTX debtors have identified $1.7 billion of cash, $3.5 billion of crypto assets and $3 million of securities, the firm said in a statement. FTX filed for bankruptcy protection in November and could owe $3.1 billion to its top 50 creditors. 

“We are making important progress in our efforts to maximize recoveries, and it has taken a Herculean investigative effort from our team to uncover this preliminary information,” Ray said in a statement.”We ask our stakeholders to understand that this information is still preliminary and subject to change.” 

FTX’s top-level management and advisers met with the committee of unsecured creditors in the bankruptcy case on Tuesday to share a presentation on the asset recovery process. The $5.5 billion in assets is slightly higher than the $5 billion that FTX lawyers told a bankruptcy judge they had located last week.

The debtors also discovered that both FTX.com and FTX US face digital asset shortfalls. Debtors have identified $1.6 billion of digital assets associated with FTX.com. Of that total, $323 million was subject to unauthorized third-party transfers after the bankruptcy filing, and another $426 million of that sum is in the custody of Bahamas regulators.

Meanwhile, $742 million is in cold storage under FTX debtor control and $121 million is pending transfer to cold storage under the debtors’ control.

“The assets identified as of the Petition Date are substantially less than the aggregate third-party customer balances suggested by the electronic ledger for FTX.com,” the company said.

The debtors identified $181 million of digital assets associated with FTX US, $90 million of which was subject to unauthorized third-party transfers after the bankruptcy filing. Of the rest, $88 million is in cold storage under FTX debtor control and $3 million is pending transfer to debtor control.

Former FTX CEO Sam Bankman-Fried, who is facing criminal fraud charges, has insisted that FTX US is “fully solvent” and can pay back its customers. 

Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from founder and former FTX and Alameda CEO Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions.

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