FTX lawyers told the bankruptcy court that the exchange had recovered more than $5 billion in liquid assets. Meanwhile, according to leaked information, the exchange plans to sell $4.6 billion in assets to pay back customers. This is considered as a move that could lower the respective altcoin prices.
Good news for FTX customers!
Customers of bankrupt cryptocurrency exchange FTX may soon get some of their losses back. FTX’s bankruptcy attorney, Adam Landis, revealed during a hearing that the exchange raised more than $5 billion in different assets. According to a CNBC report, the attorney states that this amount does not include the $425 million in cryptocurrencies held by the Bahamas Securities Commission. It also excludes the value of illiquid cryptocurrency tokens held by FTX.
This is because the exchange’s token positions are ‘too large relative to the total supply’. Landis Rath & Cobb partner explained that the sale of these tokens by FTX will significantly impact their market. Meanwhile, attorney Landis says it’s clear what FTX is doing with the lost funds. FTX CEO Sam Bankman-Fried (SBF) has been identified as instructing Gary Wang to create a ‘backdoor’ for Alameda’s unauthorized borrowing from FTX.
cryptocoin.com As you follow, Alameda also used borrowed client funds to buy planes, houses, throw parties and make political donations. Alameda also gave personal credits to its founders and sponsored several FTX marketing initiatives, including the FTX Arena in Miami and a Formula 1 team.
Will the sale cause a drop in altcoin prices?
According to a New York Post report, FTX plans to dump some of its recovered liquid assets, which are non-strategic investments, to repay some of the lost client assets. The exchange’s attorney, Andy Dietderich, told John Dorsey, the US bankruptcy judge in Delaware, that these assets have a book value of $4.6 billion.
He added that once the exchange accurately determines the total amount owed to its creditors, the liquidation will proceed. It is still working to establish accurate internal records and the actual lack of customers is unknown. Similarly, the court gave until March 15 for the completion of this work. Current estimates by FTX attorney Brian Glueckstein of Sullivan & Cromwell put the figure at roughly $10 billion owed to 9 million creditors.
Another issue that came up at the hearing was how to coordinate the compensation of customers. Landis spoke about the cooperation agreement that FTX recently announced with the Bahamas Securities Commission.
It doesn’t matter who collects $1 for customers, as long as customers get it. We formed a task force with the official committee of creditors and Bahamas JPL to explore alternatives for the sale or reorganization of the international platform.
However, this recovery effort, which is a welcome boon for FTX customers, is likely to cause some major volatility in the crypto market. Conor Grogan, director of crypto exchange Coinbase, predicts that several tokens will likely be affected by the move. These include Solana (SOL), MPAS (MAPS), Oxygen (OXY), Wrapped BTC (WBTC), BONA and SPL.
