Lawyers dealing with FTX crypto collapse identify 9m customers
While lawyers for failed crypto firm FTX have uncovered billions in assets, there’s a long line of people looking to get their money back.
There has been more than $US5 billion ($A7.3 billion) worth of assets recovered for the collapsed cryptocurrency exchange FTX but how much up to nine million customers have lost is still unknown, a US court has heard.
The company was valued at $US32 billion ($A47 billion) just a year ago but experienced a spectacular downfall when it filed for bankruptcy in November last year sending shockwaves through the cryptocurrency world.
Its disgraced founder Sam Bankman-Fried was arrested on fraud charges in the US last month after reports emerged that his businesses were poorly managed and little more than Ponzi schemes built on “a house of cards”.
He has pleaded not guilty to eight charges involving fraud and money laundering.
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But in some good news for investors, customers and lenders, who are estimated to have lost billions in the collapse, some assets have been uncovered and do not include those seized in the Bahamas.
“We have located over $US5 billion of cash, liquid cryptocurrency and liquid investment securities,” Andy Dietderich, an lawyer for FTX told a US bankruptcy judge.
He also revealed there are plans to sell non-strategic investments valued at $US4.6 billion.
However, the legal team was still working to compiling accurate internal records, particularly around customer losses as it identified nine million accounts.
The US Commodities Futures Trading Commission has estimated customer losses at more than $US8 billion.
Assets also seized in the Bahamas have wildly differing estimated values with FTX putting them at $US170 million while Bahamian authorities have registered them as high as $US3.5 billion.
FTX is alleged to have secretly transferred up to $US10 billion ($A14.8 billion) of customer funds to its trading firm Alameda.
“We know what Alameda did with the money,” Mr Dietderich told the court on Wednesday. “It bought planes, houses, threw parties, made political donations. It made personal loans to its founders. It sponsored the FTX Arena in Miami, a Formula 1 team, the League of Legends, Coachella and many other businesses, events and personalities.”
Mr Dietderich was also seeking court approval to keep customer’s names a secret for six months, amid plans to sell four companies that were part of the group via auction next month.
Its lawyers also plan to end its seven-year sponsorship deal with the League of Legends video game, which only began in 2021.
Some high profile investors of FTX, who are unlikely to get their money back include American football star Tom Brady, his former wife supermodel Gisele Bündchen and the New England Patriots owner Robert Kraft.
Mr Dietderich also revealed that the FTX founder and his inner circle “often” made “unsuccessful” risky crypto bets as well as investing in businesses.
“We know all this has left a shortfall in the value to repay customers and creditors,” he said. “The amount of the shortfall is not yet clear. It will depend on the size of the claims pool and our recovery efforts.”
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