FTX has now identified roughly $5.5 billion worth of digital assets for recovery, but said $415m has been hacked
The collapsed cryptocurrency exchange FTX has provided an update for investors and revealed that it has identified about $5.5 billion worth of digital assets for recovery.
Last week FTX said that it had located more than $5bn (£4.1bn) of assets, but now thanks to a “herculean investigative effort” it has identified $5.5 billion worth of digital assets – a number that includes $415 million in “hacked crypto.”
It comes after FTX filed for Chapter 11 bankruptcy protection last November when a multi-billion dollar hole was found in its balance sheet – amid reports of financial impropriety.
“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 J. Ray III, CEO and chief restructuring officer of the FTX Debtors.
“We ask our stakeholders to understand that this information is still preliminary and subject to change,” Ray added. “We will provide additional information as soon as we are able to do so.”
According to FTX, the $415 million worth of crypto was hacked from the exchange’s accounts, and represents a sizable portion of the identified assets it is trying to recover.
FTX said the hacked crypto included “unauthorised third-party transfers” of $323 million out of FTX.com (the international business) and $90 million out of FTX US.
Another $2 million of hedge fund Alameda Research’s crypto also was stolen, it added.
The missing crypto could be connected to a hack of FTX’s systems that was uncovered shortly after the company collapsed in November.
Meanwhile FTX’s advisors are also reviewing a $2.1 billion share repurchase payment from FTX to crypto exchange Binance in the third quarter of 2021.
Binance was the first outside investor in FTX, but Bankman-Fried bought out Binance’s stake in his company in 2021.
It should be noted that the decision by Binance in November to pull out of its deal to purchase FTX came days before the exchange collapsed into Chapter 11.
Binance said it had carried out a due diligence check on FTX’s balance sheet, which flagged “significant concerns” and convinced it to back out of the deal.
Then just before Christmas Bankman-Fried was freed on a $250m bail, but was ordered to remain under strict supervision at his parents’ home in Palo Alto, California, and wear an ankle bracelet.
His trial is scheduled for 2 October.
US prosecutors have already secured guilty pleas from two former top associates of Bankman-Fried’s – former Alameda chief executive Caroline Ellison and former FTX chief technology officer Gary Wang – who are co-operating with prosecutors and may testify at trial.
FTX’s new CEO, John J. Ray, has previously attested that at least $8 billion of customer assets were unaccounted for in the “worst” case of corporate control he’d ever seen.