FTX Scandal: Exchange locates $5 Billion in assets, but customers may have lost billions

FTX Scandal: Exchange locates $5 Billion in assets, but customers may have lost billions

Lifestyle Media Social
January 12, 2023 by Super System
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sam bankman-fried ftx scandal

FTX Bankruptcy: $5 Billion in assets found, but customer losses remain uncertain

FTX, a cryptocurrency exchange that filed for bankruptcy protection in November, has located more than $5 billion of assets, according to an attorney for the firm. However, the extent of losses to customers is still not known.

FTX CEO, Sam Bankman-Fried, accused of “Epic” Fraud

Prosecutors have accused FTX’s former chief executive Sam Bankman-Fried of orchestrating an “epic” fraud that may have cost investors, customers and lenders billions of dollars. Mr Bankman-Fried has pleaded not guilty to charges that he cheated investors. In December, federal prosecutors announced eight criminal charges against him, including wire fraud, money laundering and campaign finance violations. Financial regulators have also brought claims against Mr Bankman-Fried.

FTX Co-Founder and former head of Alameda also charged

FTX co-founder Gary Wang and Caroline Ellison, the former head of Alameda, have also been charged over their alleged roles in the company’s collapse. Authorities said they were both cooperating with the investigation.

Assets located, but extent of customer losses still unknown

“We have located over 5 billion dollars of cash, liquid cryptocurrency and liquid investment securities,” Andy Dietderich, an attorney for FTX, told US Bankruptcy Judge John Dorsey in Delaware. Mr Dietderich said that the recovered funds do not include assets seized by the Securities Commission of the Bahamas, where FTX was based and where Mr Bankman-Fried was living at the time of his arrest. Most of FTX’s customers and investors who are facing losses have not been named in the hearings. However, American football star Tom Brady, his former wife Giselle Bündchen and New England Patriots owner Robert Kraft were mentioned in court filings.

FTX valued at $32 billion a year ago

FTX, which a year ago was valued at $32 billion, filed for bankruptcy protection on November 11. It has been estimated that $8 billion of customer’s funds was missing. US federal prosecutors have accused Mr Bankman-Fried of misappropriating FTX customers’ funds to pay debts at his cryptocurrency trading firm Alameda Research and to make other investments.

Bankman-Fried arrested in the Bahamas, released on $250 million bail

In December the 30-year-old was arrested in the Bahamas and extradited to the US. He has been accused of committing “one of the biggest financial frauds in US history.” In late December Mr Bankman-Fried was released from detention on $250 million bail on condition that he does not leave his parents’ home in California. In an interview with BBC News before his arrest, he said: “I didn’t knowingly commit fraud. I don’t think I committed fraud. I didn’t want any of this to happen. I was certainly not nearly as competent as I thought I was.”

The collapse of FTX highlights the risks and uncertainties associated with investing in cryptocurrency. While the location of assets is a positive development, the extent of customer losses is still not clear, and the accusations of fraud against the former CEO and others at the company raise serious concerns. The case is ongoing and it will be important to closely follow any developments.