Crypto Exchange FTX Recovers $5 Billion in ‘Liquid’ Assets, Might Contemplate Sale

During the procedural bankruptcy hearing on Wednesday, January 11, the new leadership at crypto exchange FTX announced that they have recovered $5 billion worth of liquid assets including cash and other digital assets.

These could be a welcome news for FTX customers who have been struggling with their frozen funds since the implosion of the crypto exchange in November 2022. The latest development comes soon after federal prosecutors announced the seizure of at least $500 million worth of FTX-linked assets belonging to disgraced founder Sam Bankman-Fried.

However, these $5 billion worth of liquid assets doesn’t include the $425 million in crypto which is currently in custody of the Securities and Exchange Commission of The Bahamas. Previously, the newly appointed FTX CEO, John J. Ray, has attested $8 billion worth of customer assets that are unaccounted.

During the Wednesday’s court hearing, FTX attorney Andy Dietderich said: We are engaged in a complex effort now to recreate petition date claim values for every customer. We are building financial statements from the ground up using the general ledger and bank transaction records rather than the previous incomplete and unreliable financial statements of the debtors. This will put us in the position to describe the financial results of the debtors accurately for the first time.”

It was a lengthy hearing on Wednesday as lawyers appeared before Judge John Dorsey for explaining the possible sale of FTX entities. Dietderich said that the company is willing to sell $4.6 billion worth of non-strategic investments which include four major subsidiaries - LedgerX, Embed, FTX Japan and FTX Europe. As reported, more than 100 potential buyers have shown interest in acquiring the assets of FTX.

Additionally, the lawyers also discussed whether to redact the names of FTX’s nine million customers. After hearing the arguments on the redacted customer list, Judge Dorsey decided that they would be keeping the customer and creditor names private for at least three months. Judge John Dorsey believes that these people might face privacy concerns if their information becomes public.

I want to make sure I’m doing the right thing,” Dorsey said. We have a list of people who may be customers, may be creditors, may be both, and I don’t know which is which.”

Kevin Cofsky, a partner at FTX’s proposed investment bank Perella Weinberg Partners said that FTX might consider selling its core exchange in the bankruptcy process. Cofsky also suggested that revealing the names of the customers might reduce the value of the company since they could be solicited by other crypto firms.