FTX Debtors Identify $5.5 Billion in Liquid Assets
The top level management of FTX today met with the FTX Unsecured Creditors Committee so as to share critical preliminary information obtained since the commencement of the Chapter 11 proceeding (November 11, 2022). The FTX Debtors reported they have identified $5.5 Billion in liquid assets for the benefit of the FTX bankruptcy estate.
In the January 17 announcement, it was reported that the following assets were identified: $1.7 Billion in cash; $3.5 Billion in cryptocurrency assets; and, $0.3 Billion in securities. These are assets which the Debtor may sell to help in the repayment of creditors.
Specifically, with regard to FTX.com, the Debtors have reported they have identified $1.6 Billion as of the date of the bankruptcy petition. Of this sum, $323 Million represents assets which were subject to unauthorized post petition third party transfers. Another $426 Million was transferred to of which cold storage under the control of The Securities Commission of The Bahamas. Additionally, $742 Million is in cold storage under the control of the FTX Debtors and another $3 Million is in control of the Debtors and is awaiting transfer to cold storage. The Debtor stresses that the sum of assets identified as of the date of the bankruptcy petition (November 11, 2022) are significantly less than the agglomeration of third party customer balance per the FTX.com electronic ledger.
Specifically, with regard to the FTX US Exchange, the Debtors have reported they have identified $181 Million worth of digital assets. Of this sum, $90 Million was subject to unauthorized post petition third party transfers ($88 Million of the sum being held under the Debtor's control in cold storage and $3 Million is in control of the Debtors and is awaiting transfer to cold storage.) The Debtor stresses that the sum of assets identified as of the date of the bankruptcy petition (November 11, 2022) are significantly less than the agglomeration of third party customer balance per the FTX US electronic ledger.
According to the Debtors, these values were calculated using 'preliminary pricing information' from FTX's order book as of the bankruptcy petition date. The Debtors further assured that they are continuing with their efforts to secure assets that may be associated with FTX and to trace said assets back to the appropriate exchange if possible.
The Chief Executive Officer and Chief Restructuring Officer of the FTX Debtors, John J. Ray III stated: "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 [...] 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" [FTX Debtors. FTX Debtors Provide Additional Information to Customers and Other Stakeholders. (Accessed January 17, 2023)].
A review of the bankruptcy proceedings pending in the District of Deleware, shows that more than $3 Billion is owed to FTX's top 50 creditors. Furthermore, it is possible that there are more than one million creditors possessing claims against FTX. A review of the January Bankruptcy Court proceedings demonstrates the the Debtors have recovered $5.5 Billion in cash and cryptocurrencies, but FTX could possibly have liabilities of up to $8 Billion. It is for this reason the Debtor's have concluded that "based on current estimates of the amount of digital assets associated with the FTX.com and FTX US exchanges as of the Petition Date, there is a substantial shortfall of digital assets at both exchanges" [FTX Debtors, supra].
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