FTX recovers $1 billion in assets as company’s breakup continues

According to recent reports, the new management of sunken crypto-currency exchange FTX has identified $1 billion worth of new assets, including $720 million in cash. The recent discovery is part of a concerted effort by FTX’s new management to recover as much money as possible from numerous bank accounts.

Since John Ray III and his associates succeeded Sam Bankman-Fried as head of FTX, they have sought to resolve the Bahamian exchange’s insolvency. However, Ray has repeatedly emphasized that the task at hand was no small one, in large part because of poor record-keeping by his predecessors. In addition, the new FTX CEO and insolvency expert has previously alluded to criminal activity by Bankman-Fried and his cohorts.

FTX’s new management expects a $1 billion asset recovery at the latest creditors’ meeting.

New FTX management provided an update on the recovery of $1 billion in assets at a procedural hearing this week. In addition, FTX executives informed the meeting of creditors that several U.S. financial institutions would hold the funds upon authorization from the U.S. Department of Justice. In addition, Ray and his associates revealed that numerous other U.S. institutions already have custody of an additional $500 million.

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The new management emphasized that they are still trying to access millions of additional dollars in various bank accounts in order to secure them. Speaking under oath during the bankruptcy proceedings, FTX’s new CFO, Mary Cilia, explained:

“We are in the process of contacting all of these banks and changing the signatories on the accounts to gain access to the accounts and transfer the cash as much as possible to an authorized depository institution.”

Mary Cilia added that another $130 million remains blocked in Japan due to regulations. FTX Japan was apparently the safest place for customers during the company’s regular operations and says it is close to refunding customers in full. On Dec. 13, the bankrupt exchange’s East Asian subsidiary issued a statement that read:

“We have developed a plan for the resumption of the withdrawal service, which has been shared with and approved by the new management team of FTX Trading. Work to develop this plan has already begun, and our engineering teams are working to enable FTX Japan users to withdraw their funds.”

Breakdown of the additional funds update

In addition to the FTX Japan update, Mary Cilia also stated that an additional $6 million of FTX funds remain available for operational expenses, including salaries. In addition, she added that most of the $423 million balance held in unlicensed U.S. institutions is primarily with one broker. However, FTX’s CFO declined to identify that broker-dealer, revealing instead that $485 million of funds are already at an authorized depository institution.

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Amid the funds recovery exercise, ongoing efforts are attempting to identify FTX’s international crypto assets and move them to cold wallets. According to Steve Coverick, senior director at Alvarez & Marsal, FTX’s financial advisor, custody providers such as BitGo would be responsible for transferring cold wallets.

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