FTX says it has identified a deficit of $8.9 billion in customer funds that it can’t account for, the first time the bankrupt cryptocurrency exchange has pinned down how much money has gone missing, WSJ Pro Bankruptcy reported. In a public presentation released yesterday, FTX said that it had identified around $2.7 billion of customer assets, compared with $11.6 billion of balances outstanding on customer accounts. The estimated value of FTX’s assets and liabilities are based on crypto prices on the day of the company’s bankruptcy filing in early November. New managers at FTX, led by restructuring veteran John J. Ray III, have been working to locate and protect billions of dollars in missing customer funds since the company filed for bankruptcy. FTX sought chapter 11 protection after allegations emerged that Alameda Research, a hedge fund started by FTX co-founder Sam Bankman-Fried, was taking customers’ funds from FTX accounts without authorization. Ray said on yesterday that it isn’t yet possible to predict how much customers will be able to recover. “[The exchange’s] books and records are incomplete and, in many cases, totally absent,” Ray said. “For these reasons, it is important to emphasize that this information is still preliminary and subject to change.” It isn’t clear whether customers will be able to recover the entirety of the $2.7 billion in assets that FTX has found. About $1.5 billion of that total included illiquid crypto assets like FTX’s token, FTT, whose value has fallen since the firm’s collapse. Around $880 million in found customer assets are considered “liquid currencies” like dollars, stablecoins, bitcoin or ether, FTX said. Around $400 million are in other receivables, the presentation shows. A great deal of the total $8.9 billion shortfall at FTX can be attributed to Alameda Research, which had borrowed $9.3 billion from customers’ accounts before the exchange went bankrupt, the presentation shows.
