FTX's new management recovered over 80% of misappropriated assets.
FTX, the bankrupt cryptocurrency exchange established in 2019, revealed that it has so far recouped approximately $7 billion of misappropriated assets.
Despite the complexities posed by the tangled funds, the investigation continues to make headway, with a remaining $2 billion yet to be discovered.
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John Ray, CEO of FTX, disclosed this information during the company’s second interim report on June 26th. The FTX Debtors, a collective consisting of FTX and its affiliates, face the difficult task of untangling an estimated $8.7 billion in misappropriated customer assets.
Out of almost $9 billion, $6.4 billion was in fiat and stablecoins.
The challenge lies in the alleged deliberate commingling of funds by the former FTX leadership. The report accuses the leadership of not only misusing customer deposits intentionally but also concealing their actions with the help of a senior FTX Group attorney and others.
Notwithstanding extensive work by experts in forensic accounting, asset tracing and recovery, and blockchain analytics, among other areas, it is extremely challenging to trace substantial assets of the Debtors to any particular source of funding, or to differentiate between the FTX Group’s operating funds and deposits made by its customers.
The report alleges that the misrepresentation extended to Congress, as it revealed statements made by former CEO Sam Bankman-Fried (SBF). Some reports claim that an unidentified senior FTX attorney purportedly fired another attorney over raising objections to the company's deceptive practices.
Misappropriated assets were allegedly channeled into a variety of channels, including political contributions, charity donations, and corporate investments such as luxury real estate. It was alleged that:
The FTX Senior Executives <SBF, Gary Wang and Nishad Singh> and <Alameda Research CEO Caroline> Ellison informally tracked the size of FTX.com’s undisclosed, fiat currency liability to customers that resulted from the extensive commingling and misuse of FTX.com customer deposits.
As FTX navigates through these tumultuous waters, the cryptocurrency exchange's focus remains on uncovering the remaining $2 billion of misappropriated assets.
