FTX bankruptcy team locates $US5bn in cash and assets, flags sales

But the amount of the shortfall in customer funds and the size of claims from the collapse of Sam Bankman-Fried’s cryptocurrency empire isn’t yet clear.

Former FTX chief executive and founder Sam Bankman-Fried-Fried has been indicted for fraud by US prosecutors. Picture: Ed Jones/AFP

Bankrupt cryptocurrency exchange FTX’s managers have located more than $US5bn ($7.2bn) in cash and other liquid assets and is hoping to sell hundreds of additional holdings with a book value of more than $US4.6bn.

Those assets are valued as of FTX’s bankruptcy filing in November and don’t include $US425m held by authorities in the Bahamas, company lawyers said overnight in the US Bankruptcy Court in the US.

FTX lawyers also told the judge overseeing the bankruptcy case that the amount of the shortfall in FTX customer funds isn’t yet clear.

The company is working on determining the size of the claims pool and potential recoveries for some 9 million customer accounts it has identified, FTX lawyer Andrew Dietderich said.

Mr Dietderich said that new FTX management is “building financial statements from the ground up,” rather than using previous statements.

FTX has put some salvageable units up for sale since entering Chapter 11, including Embed Financial Technologies, LedgerX, FTX Japan and FTX Europe.

The company is also “well underway on plans to monetise over 300 other non-strategic investments, with a book value over $US4.6bn,” Mr Dietderich said.

His client, FTX chief executive John J Ray III, has said the company didn’t keep reliable financial records and lacked normal corporate controls under past management.

Mr Ray took over the firm from founder Sam Bankman-Fried-Fried, who has pleaded not guilty to fraud, and placed it in bankruptcy after concerns about the exchange’s financial health fuelled a wave of customer withdrawals.

The sales process underway doesn’t include FTX.com or FTX.US, the company’s primary exchanges serving international and US customers.

Kris Hansen, a lawyer for the unsecured creditors committee, said at the hearing that a “reboot” of the exchanges is under discussion and could unlock “incredible value” for customers if realised.

Separately, the judge overseeing the bankruptcy case acknowledged a letter sent by a bipartisan group of US Senators questioning the independence of the law firm guiding FTX through bankruptcy, Sullivan & Cromwell.

Judge John Dorsey called the letter an inappropriate communication, and said it would have no impact on his decisions.

FTX and its sister trading house Alameda Research went bankrupt in November, dissolving a virtual trading business that at one point had been valued by the market at $US32bn.

– The Wall Street Journal