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Under New Leadership, FTX Recoups $7 Billion Amid Recovery Efforts

Ruholamin Haqshanas
Last updated: | 2 min read
Image Source: Adobestock

The new leadership team at FTX has recouped approximately $7 billion in liquid assets as the exchange continues recovery efforts. 

The company has revealed that it has made “substantial progress” in securing assets, recovering as much as $7 billion in liquid assets so far.

The exchange owed customers approximately $8.7 billion when it went bankrupt last year, according to a second report by the company’s debtors released Monday

More specifically, FTX had $6.4 billion in deficit, which was in the form of fiat currency and stablecoin that had been misappropriated, the report said. 

The announcement comes as the company has been seeking to retrieve every bit of money it can.

Last week, FTX filed a complaint in Wilmington, Delaware, bankruptcy court, asking back the $700 million its founder Sam Bankman-Fried transferred to K5 entities in 2022.

The exchange claimed that Bankman-Fried was a “profligate patron” who sent millions to K5 Global as well as affiliated entities and K5 Global co-owners Michael Kives and Bryan Baum after he attended a social event hosted by Kives in 2022.

FTX has sought the return of funds, describing the transfers as being carried out “without receiving equivalent value” and, more importantly, avoidable, meaning that they can be reversed under the Bankruptcy Code or other laws.

In another bid to raise funds for users, bankers of FTX are looking to offload their stake in AI startup Anthropic

Perella Weinberg, the boutique bank overseeing FTX’s bankruptcy proceedings, is reportedly discussing the potential sale of Anthropic’s stake with interested parties.

Meanwhile, the bankrupt crypto exchange is facing escalating legal and advisory costs.

According to filings submitted by the exchange’s bankruptcy advisors, the advisors have billed the company a staggering $121.8 million in fees and expenses for the period between February 1 and April 30.

FTX Misused and Commingled Customer Funds

In their latest report, the FTX debtors reiterated the commingling and misuse of customer deposits at FTX by the company’s previous management team. 

“From the inception of the exchange, the FTX Group commingled customer deposits and corporate funds, and misused them with abandon at the direction and by the design of previous senior executives,” John J. Ray III, the new CEO of FTX, said in a comment.

The new report comes after an earlier report by debtors of the platform discussed control failures by FTX and its group of companies in key areas, including management and governance, finance and accounting, information security, and cybersecurity.

Despite controlling tens of billions of dollars of assets across its various companies and operating in 250 jurisdictions, FTX Global “lacked fundamental financial and accounting controls,” the previous report said.

It further claimed that FTX Global had poor or near non-existent digital asset management, information security, and cybersecurity controls, which exposed crypto assets under its control to a grave risk of loss, misuse, and compromise.

The report also alleged that FTX had “no dedicated personnel” in cybersecurity, leaving such matters in the hands of Nishad Singh and Gary Wang, who lacked the experience and training to handle the firm’s complex cybersecurity needs.