liquidators end up with $5 billion in assets
The liquidators of American cryptocurrency exchange FTX said on Wednesday that they have recovered more than $5 billion worth of assets that can be returned to the company’s customers and creditors. These assets include cash, as well as “liquid” cryptocurrencies and financial securities, that is, securities that can be easily converted into cash, Andrew Dietderich, one of the group’s lawyers, explained during the court hearing. in the east.
In addition to the 5 billion listed on Wednesday, FTX said it controls “illiquid” assets in cryptocurrencies, meaning assets that cannot be sold in the short term. Specifically, this capital is expressed in highly volatile digital currencies and “cannot be sold without affecting the relevant market and reducing the value of this currency”, explained Andrew Dietderich. Added to this are assets recovered by FTX liquidators in the Bahamas, valued at $170 million at the end of 2022.
3.1 billion euros: FTX’s huge debt to its 50 largest creditors
The world’s second largest cryptocurrency has collapsed within days
At the start of the story, FTX, the world’s second-largest cryptocurrency exchange, collapsed in early November after being overexposed to a sister company, Alameda Research, in a Coindesk media release. created by the exchange platform. As a result, FTT owners panicked about the overvaluation of the cryptocurrency, so they started selling FTX cryptocurrency en masse. Likewise, a large number of customers tried to withdraw their money from the platform immediately after the news. The problem turned out to be that FTX didn’t actually have all of its clients’ money in the business. As a result, the platform blocked withdrawals from its users for several days and then went bankrupt on November 11.
Cryptos: The first elements that explain the collapse of FTX
In the document demanding the placement of FTX under the bankruptcy regime, the group measured its liabilities between 10 and 50 billion dollars. This includes, according to the lawyer, the frozen assets of the platform’s customers with more than 9 million accounts, as well as the debts of FTX. According to CNBC, FTX owes 3.1 billion euros to about one million creditors worldwide and its 50 largest creditors.
Sam Bankman-Fried is accused of fraud
Former FTX head Sam Bankman-Fried is accused of misappropriating funds deposited by clients on the platform through another company, Alameda Research, to use in risky financial transactions, mainly cryptocurrencies, without their permission. Thus, when the price of FTT fell, the money that would have been placed in this cryptocurrency would be gone without the knowledge of the customers. Former FTX and Alameda officials are accused of using some of the embezzled funds to buy real estate, mostly in the Bahamas.
Arrested in Nassau, Bahamas, in late December, then extradited to the United States, he was charged by a federal judge in New York with wire fraud and criminal conspiracy. He faces several decades of imprisonment. At the end of December, with the help of the SBF family, he was released on a bond of 250 million euros, because the former CEO of FTX had no more money to pay for his release. In late November, the central figure in the biggest scandal in cryptocurrency history claimed that only $100,000 was available. At its peak, at the beginning of the year, his fortune was estimated at $26 billion, based entirely on the holdings of his since-defunct companies.
Lack of “reliable financial information”.
Two months after the platform’s bankruptcy, if the liquidators finally announce that they have seized the company’s assets, it is, above all, a very bad management of the latter, according to the new CEO of FTX, John Ray III. trying to refund customers. In November, he said no “I never saw it [dans sa carrière] such a complete failure of the company’s control mechanisms and such an obvious lack of reliable financial information”.
Finally, after 2 months, with the consent of creditors, FTX started the sale of four group entities, in particular, its Japanese subsidiary FTX Japan and LedgerX, a trading platform for derivative financial products based on cryptocurrencies. According to Sullivan & Cromwell’s Andrew Dietderich, FTX’s new executives are also set to divest more than 300 “non-strategic” investments with a total book value of more than $4.6 billion. After an initial imbroglio, the new directors of FTX and the Bahamian liquidators reached an agreement, which provides that all sums raised in the United States and the Bahamas will be used to compensate customers and creditors.
El Salvador continues to bet on Bitcoin despite FTX scandal
Despite the bad news affecting the cryptocurrency world after the FTX incident, some players continue to believe and invest in the ecosystem. El Salvador’s Legislative Assembly, dominated by the ruling party, approved a digital asset law on Wednesday aimed at legalizing debt transfers or issuances with cryptocurrencies. This law allows the country to issue bonds that can be bought with bitcoin. A mechanism by President Nayib Bukele to finance the construction of “Bitcoin City”, an urban project in the eastern department of La Union, to be powered by geothermal energy from a volcano in the region. The government has already bought 2,381 bitcoins for $107 million.