Bankrupt cryptocurrency exchange FTX has managed to recover a majority of its assets owed to customers and may be poised for a revival next year.
The recovery was partly aided by an appreciation in crypto asset prices over the last few months, helping strengthen FTX’s balance sheet.
During a bankruptcy hearing on Wednesday, lawyers with Sullivan and Cromwell representing FTX said the exchange now possesses $7.3 billion in distributable assets. Including cash and crypto. After an extraordinarily “busy and productive” few months since the exchange went bust in November 2022, FTX attorney Andy Dietderich said that the “situation has stabilized, and the dumpster fire is out.”
The lawyer noted that crypto asset prices will be expected to rise and fall during the case. “We will be increasing distributable assets – hopefully dramatically – as the case progresses, but it’s also important not to lose what we have now,” continued Dietderich.
Back in January, FTX’s lawyers reported that it had identified $5.5 billion in liquid assets. Those assets include $1.7 billion in cash, $0.3 billion of securities, and $3.5 in crypto-based on prices at the time. Bitcoin’s price stood narrowly above $21,000 on the day FTX released a press release detailing its recoveries, but has since risen above $30,000.
The scenario mimics that of the bankruptcy case surrounding the Tokyo-based Mt. Gox exchange, which collapsed in early 2014. While only a fraction of the Bitcoin lost at the company has been recovered for creditors, the appreciation of BTC’s value since that time means creditors will be more than compensated for their losses in USD terms.
FTX’s attorney added that the legal team will start planning to discuss next steps for the “potential restart or recapitalization” of FTX, aiming to file a “preliminary plan of reorganization” with the court in July. Confirmation of that plan will ideally take place by Q2 2024.
FTX’s lawyers did not mince words regarding the mismanagement and fraud conducted by former FTX boss Sam Bankman-Fried. Summarizing a report published earlier this week on FTX’s control failures, Dietderich said Bankman-Fried frequently lied to creditors in order to “maintain a digital con game.”
“The FTX exchanges appeared to the user as legitimate… but in truth, it was a facade,” he said, adding that there was no “reliable relationship” between balances displayed to users on the FTX app, and their underlying real-world positions.
Sam Bankman-Fried currently faces a 13-count charge from the Justice Department alleging various forms of fraud, bribery, and campaign finance violations. Bankman-Fried has pleaded not guilty to all accusations.
The post FTX’s Recovered Assets Surge to $7.3 Billion, May Restart Exchange in 2024 appeared first on CryptoPotato.
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