FTX debtors identify $426 million of digital assets transferred to cold storage by Securities Commission says

FTX debtors identify $426 million of digital assets transferred to cold storage by Securities Commission says
FTX logo is seen in this illustration taken, November 8, 2022. REUTERS/Dado Ruvic/Illustration

NASSAU, BAHAMAS — FTX Trading and its affiliated debtors revealed yesterday that they have identified $1.6 billion of digital assets associated with FTX.com of which $426 million was transferred to cold storage under the control of The Securities Commission of The Bahamas (SCB).

FTX Trading and its affiliated debtors said yesterday that they have provided details regarding the digital assets identified so far in their attempts to recover funds from the collapsed crypto exchange and its various subsidiaries.

FTX Trading said that its top-level management and advisors met with the members of and advisors to the Official Committee of Unsecured Creditors in their chapter 11 cases yesterday morning as part of their ongoing efforts to share preliminary information obtained since the commencement of the chapter 11 cases on November 11, 2022, and to provide an update regarding asset recovery efforts to date.

FTX Trading and its affiliated debtors also revealed that a total of approximately $5.5 billion of liquid assets have been identified, comprised of $1.7 billion of cash, $3.5 billion of crypto assets, and $0.3 billion of securities.

“With respect to FTX.com, the FTX Debtors have identified approximately $1.6 billion of digital assets associated with FTX.com as of the Petition Date, $323 million of which was subject to unauthorized third-party transfers post-petition, $426 million of which was transferred to cold storage under the control of The Securities Commission of The Bahamas, $742 million of which is in cold storage under the control of the FTX Debtors, and $121 million of which is pending transfer to cold storage under the control of the FTX Debtors. The assets identified as of the petition date are substantially less than the aggregate third-party customer balances suggested by the electronic ledger for FTX.com,”  it was noted. 

The Securities Commission has stated that it moved $3.5 billion from FTX’s Bahamian subsidiary, FTX Digital Markets, into its own digital wallets to be held on a “temporary basis” until it is directed by the country’s Supreme Court to deliver them to customers and creditors, or to liquidators.

It was further noted, “With respect to the FTX US exchange, the FTX Debtors have identified approximately $181 million of digital assets associated with FTX US as of the Petition Date, $90 million of which was subject to unauthorized third-party transfers post-petition, $88 million of which is in cold storage under the control of the FTX Debtors, and $3 million of which is pending transfer to cold storage under the control of the FTX Debtors. The assets identified as of the Petition Date are substantially less than the aggregate third-party customer balances suggested by the electronic ledger for FTX US.”

“We are making important progress in our efforts to maximize recoveries, and it has taken a Herculean investigative effort from our team to uncover this preliminary information,” said John Ray III, the Chief Executive Officer and Chief Restructuring Officer of the FTX Debtors. “We ask our stakeholders to understand that this information is still preliminary and subject to change. We will provide additional information as soon as we are able to do so.”

Earlier this month, FTX founder Sam Bankman-Fried pleaded not guilty in a Manhattan federal court to charges that he defrauded investors and illegally diverted a massive amount of customer deposits to his Alameda Research crypto hedge fund for his own personal benefit and to help grow his crypto empire. Judge Lewis A. Kaplan set a tentative trial date of October 2. Bankman-Fried, 30, has been under house arrest at his parents’ California home on a $250 million bond.