FTX Recovered $5 B Plus in Assets: Bankruptcy Attorney

• Interestingly FTX manages to recover more than $5 billion in assets.
• This recovery does not include $425 million under the custody of the Securities Commission of the Bahamas. 
• The final amount FTX owed to customers is still unknown.

Every update in the FTX saga is important as it may turn the tables. According to a Bankruptcy attorney, FTX managed to recover $5 billion-plus through different assets while not touching $425 million in crypto under the custody of the Securities Commission of the Bahamas. The exact amount owed to customers is still not known. 

Landis Rath and Cobb attorney, Adam Landis, said on FTX’s behalf that they managed to locate more than $5 billion of cash, liquid cryptocurrency, and liquid investment securities measured at the petition date. They also possess a considerable number of illiquid tokens, which were not touched as their sale may adversely affect their prices. 

Landis said that SBF had ordered Gary Wang to create a mechanism that would allow Alameda from FTX with customer consent. Additionally, Bankman created a credit thread between FTX and Alameda, amounting to roughly $65 billion. 

Further adding to the case, Landis says they know what Alameda did with these ill-gotten gains. Personal loans to their founders were made, and money was wasted on buying planes, real estate, making political donations, and throwing parties. They sponsored FTX Arena in Miami, a Formula One team, the League of Legends, Coachella, and many other events, businesses, and personalities. All these extravagant expenditures led to a “shortfall in value” to repay customers and creditors. 

Landis said that the final amount of the shortfall is not clear yet and will depend on the claim pools and recovery efforts made. But every passing week brings us closer to completing the work required to estimate the recoveries. 

It was estimated in December 2022 by Chief Financial Officer, Mary Cilia, that the company would complete the pending work by April 2023. But in Wednesday’s hearing, Judge John Dorsey of the Delaware Bankruptcy court set the deadline to be March 15, 2023. 

Brian Glueskstein of Sullivan & Cromwell argued that there could be nearly 9 million creditors; this figure was put forth by Kevin Cofsky, a partner with Perella Weinberg Partners, a financial advisory firm. 

Landis also pointed out that the recent cooperation agreement with the Securities Commission of the Bahamas would be an important initial step in aligning incentives and maximizing joint recoveries. 

Further adding that as long as customers get what they need, it does not matter who gets $1 or $100. 

Landis says, “We’ve established a task force with the official committee of creditors and the Bahamas JPL to explore alternatives for the sale or reorganization of the international platform.”

Sam Bankman-Fried had officially entered a ‘not-guilty’ plea on January 3, 2023, denying all eight charges of wire fraud and conspiracy. At the same time, former associates Caroline Elisson of Alameda Research and Gary Wang, former CTO of FTX, had already pleaded guilty and could be working with the authorities as witnesses in the case. 

Sam’s denial and Gary and Caroline’s acceptance had given an interesting turn to this whole saga. Often such white-collar crimes are settled outside the court, and even if this case is to go through the regular procedure, it will be quite interesting to see the outcome. 

Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.

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