FTX Finds $1B in Hundreds of Company Bank Accounts

FTX, the insolvent CeFi exchange, has unearthed $1B worth of assets including $720M in cash stored in hundreds of bank accounts, the company said in a court hearing on Tuesday.

FTX’s new management team, who took control of the company on Nov. 11 under bankruptcy court proceedings,said the cash is held in various U.S. financial institutions and that Bahamas-based FTX has access to an additional $500M.

Fiat Cash

“We are reaching out to all of those banks and changing the signatories on the accounts so that we can get access to the accounts and move the cash as much as we can to authorized depository institutions,” said Mary Cilia, FTX’s new CFO.

Cilia said that an additional $130M worth of fiat cash is held by Japanese institutions. However, she said Japanese regulators are earmarking those funds to redeem local FTX customers.

FTX will hold onto a further $6M for operational expenses including payroll. FTX is also working to identify crypto assets held with other international platforms, according to information disclosed in the hearing.

Under the bankruptcy process, FTX new CEO John Ray and his team plan to wind down the exchange and work with a court-appointed trustee to divvy up assets for creditors. But FTX’s shoddy accounting practices and records — Ray told a congressional committee last week he didn’t believe the scant data he did have — will make that job very difficult.

Paperwork Expected

FTX has yet to file a statement of assets or financial position, which is required under U.S. bankruptcy law. Cilia said she expects the firm will be able to file the paperwork in April.

Bankman-Fried also reportedly signed the documents for his extradition to the U.S. Bankman-Fried, who has been detained in a prison in the Bahamas, may arrive in the nation to be arraigned on eight federal charges of fraud, conspiracy, and campaign finance violations, as soon as Dec. 21.

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The Defiant

Bankman-Fried is expected to seek bail pending his trial. A New York federal grand jury indicted the 30-year-old entrepreneur on Dec. 9.

The island nation’s attorney general said the Bahamas will continue its own regulatory and criminal investigations into the collapse of FTX.

FTX suffered a run on its reserves in early November after questions regarding its financial dealings with its sister firm, the crypto hedge fund Alameda Research, triggered a crisis of confidence in the exchange. Customers attempted to withdraw billions from FTX in just a few days, culminating in the platform filing for bankruptcy on Nov. 11.

Withdrawals

The fallout revealed that many of the largest crypto lenders had issued loans to FTX and Alameda, with Genesis Global Capital, a subsidiary of Digital Currency Group’s Genesis exchange, halting withdrawals as a consequence of its exposure to the imploding exchange.

The news came at the tail-end of a year characterized by the contagion risk resulting from the failure of the Terra network and crypto hedge fund Three Arrows Capital,

On Dec. 20, Cameron Winklevoss, co-founder of Genesis, tweeted that Houlihan Lokey, the financial advisor to the Genesis Global Capital’s creditor committee, presented a plan to resolve the company’s liquidity issues and provide a path for the recovery of assets.