Bankrupt crypto exchange FTX Group has reached a deal to recover $404 million in cash from hedge fund Modulo Capital.

Reuters, citing court documents filed on Wednesday at the US bankruptcy court in Delaware, reported that Bahamas-based Modulo agreed to pay $404 million in cash and give up its claim to $56 million in assets held on FTX’s crypto exchange.

The filing also revealed that Modulo Capital had previously received no less than $475 million from Alameda Research – the investment arm of FTX – at a time when FTX was losing money and heading toward bankruptcy, according to the filings.

Cash recovery

The recovery of $404m represents 97 percent of the money that FTX companies sent to the hedge fund in 2022.

Crypto exchange FTX collapsed into Chapter 11 last November after a multi billion dollar hole was found in its balance sheet.

FTX said at the time that it was unable to completely repay customers who had deposited funds on its exchange.

FTX’s replacement CEO, the bankruptcy veteran John Ray, has previously said his top priority was the recovery of assets to repay FTX customers.

The court filings allege that Alameda, at the direction of FTX founder and then CEO Sam Bankman-Fried, had paid $25 million to acquire a stake in Modulo and contributed $450 million to an investment fund managed by Modulo.

Sam Bankman-Fried. Image credit: FTX

FTX agreed to not take further actions against Modulo or its principals Xiaoyun Zhang and Duncan Rheingans-Yoo related to the 2022 payments, according to the filings.

Alleged payouts

So far FTX has reportedly recovered more than $5 billion in its quest to repay customers.

Last week FTX alleged it was investigating more than $3.2 billion that was transferred out of the company through payments and loans to company founders and key employees.

The alleged payments were as follows:

  • $2.2 billion to Sam Bankman-Fried;
  • $587 million to Nishad Singh;
  • $246 million to Zixiao “Gary” Wang;
  • $87 million to Ryan Salame;
  • $25 million to John Samuel Trabucco;
  • $6 million to Caroline Ellison

Gary Wang, Caroline Ellison and recently Nishad Singh have pleaded guilty, and are co-operating with US prosecutors.

Bankman-Fried has been under house arrest with a $250 million bond, since he pleaded not guilty to eight federal fraud and conspiracy charges over his role in the collapse of the FTX crypto exchange.

Last month federal authorities levelled four more criminal charges against Bankman-Fried, alleging he facilitated hundreds of illegal political donations totalling tens of millions of dollars.

In total, Bankman-Fried now faces a total of 12 criminal charges, and if found guilty, could be sentenced to over 115 years in prison.

His trial is slated for 2 October 2023.

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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