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FTX: On the FTX crypto exchange platform, futures trading was supported for a range of digital assets, including Bitcoin, Ethereum, and Litecoin.
The trading platform granted access to other investment products, including leveraged tokens and options.
Professional traders and institutional investors valued FTX because of its strong liquidity and quick execution times.
The platform failed to recover after plummeting in the latter half of last year.
However, the business recovered some of its liquid assets following the November collapse.
The news
On Wednesday, FTX recovered a total of $5 billion in cash, liquid assets, cryptocurrencies, and securities investments.
According to a lawyer for the company, it is still unclear how much money was lost.
With a $32 billion market value, FTX filed for Chapter 11 bankruptcy protection in November 2022.
Sam Bankman-Fried, the company’s creator, was accused of organizing an “epic” fraud that, when it crumbled, plundered billions of dollars from clients, investors, and lenders.
Recovery
According to the company’s lawyer Andy Dietderich, several assets were retrieved at the hearing on Wednesday.
“We have located over $5 billion of cash, liquid cryptocurrencies, and liquid securities,” Dietderich told US bankruptcy Judge John Dorsey.
According to Dietderich, the company plans to sell non-strategic investments for $4.6 billion in book value.
The legal team is still attempting to generate enough internal data, according to the attorney, who also noted that the precise size of the customer deficiency is still unknown.
The US Commodities Futures Trading Commission estimates that the amount of lost money is likely greater than $8 billion.
The $5 billion in assets recovered, according to Andy Dietderich, did not include those taken by the Securities Commission of the Bahamas, where SBF resided and FTX was based.
The confiscated assets were valued at $170 million by the FTX attorney as opposed to the Bahamian authorities’ estimate of $3.5 billion.
The company’s FTT token, which is highly volatile and hardly traded, made up the assets.
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Affiliates sales
FTX may raise additional cash in the coming months to help customers after Dorsey granted their request\ to evaluate affiliates’ sales at the hearing on Wednesday.
Affiliates of the FTX group are separate legal entities with independent management and client accounts.
They include the following:
- Embed
- FTX Europe
- FTX Japan
- LedgerX
Although it had received unsolicited business bids, FTX emphasized that it had no plans to sell to any organizations.
Therefore, they intend to hold bids in February 2023.
Opposition and approval
The US Trustee Program of the federal government resisted selling the affiliates before the scope of the FTX fraud was comprehended.
FTX requested Dorsey’s permission to keep the 9 million FTX client identities a secret to maintain the company’s worth.
The company maintained that user privacy was crucial to preventing clients from being stolen by competitors.
It also respects privacy rules and prevents identity theft.
Although the business requested that the names be kept a secret for six months, Dorsey only consented to three.
He stated why he made this decision:
“The difficulty here is that I don’t know who’s a customer and who’s not.”
John Dorsey scheduled a hearing on January 20 to discuss how the company can distinguish its clients.
He said he wanted the company to return in three months to offer further details indicating the possibility of identity theft if the identities are made public.
In response, media businesses and the US Trustee Program asserted that creditor information exchange is required by US bankruptcy law to encourage fairness and transparency.
Other notes
The firm will sell its affiliates and end a 19-year, $135 million sponsorship agreement with the Miami Heat, according to a lawyer for the company.
A seven-year deal for over $89 million with the popular game League of Legends will also come to an end.
SBF
Sam Bankman-Fried was found guilty last month in federal court in Manhattan on two charges of wire fraud and six counts of conspiracy.
He is accused of defrauding client funds to satisfy financial obligations to hedge fund Alameda Research.
FTX’s founder also misguided investors about the sustainability of the company.
Bankman-Fried pleaded not guilty despite the weight of the evidence.
Sam Bankman-Fried acknowledged violating the company’s risk management policies but did not believe he was criminally liable.
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