According to attorneys in Delaware bankruptcy court, the now-fallen cryptocurrency exchange FTX has recovered over $5 billion worth of liquid assets, including cash and digital assets.
In November, FTX filed for Chapter 11 bankruptcy in the US after a failed acquisition by Binance. Binance noted that “In the beginning, our hope was to be able to support FTX’s customers to provide liquidity. But the issues are beyond our control or ability to help.”
The latest development follows the announcement of plans by federal prosecutors to seize at least $500 million worth of FTX-connected assets in line with the ongoing prosecution of the company’s co-founder Sam Bankman-Fried who resigned from his position of CEO as the exchange went bankrupt.
For FTX customers who are currently being owed at least $8 billion worth of digital currencies after FTX collapsed in November last year, the recovery is good news! According to FTX’s attorney, AdamLandis told the court, the $5 billion that was recovered regards “any value to holdings of dozens of illiquid cryptocurrency tokens, where our holdings are so large relative to the total supply that our positions cannot be sold without substantially affecting the market for the token.”
The collapse of FTX, which was one of the biggest players in the cryptocurrency space was linked to a failure to correctly mark illiquid assets to market. The company’s executives, Sam Bankman-Fried and Caroline Ellison, who is the CEO of affiliated Alameda Research, borrowed against the value of the FTX-issued native token, FTT. According to a CNBC report, “Alameda controlled the vast majority of FTT coins circulating, similar to a publicly traded companies float, and could not have liquidated their position at full book value.”
Prior to FTX’s collapse, the world’s biggest cryptocurrency exchange Binance had agreed to acquire the company but rescinded its decision about 24 hours after its initial decision. Binance’s CEO Chanpeng Zhao noted that he had initially agreed to step in after FTX’s Sam Bankman-Fried revealed the company’s situation.