FTX is unloading cryptoassets and hoarding cash as bankruptcy advisers look for a way to repay customers whose accounts have been frozen since the platform collapsed in 2022, Bloomberg News reported. The fraud-tainted crypto firm’s four largest affiliates — including FTX Trading Ltd. and Alameda Research LLC — together nearly doubled the group’s cash pile to $4.4 billion at the end of 2023 from about $2.3 billion in late October, according to chapter 11 monthly operating reports. The company’s total cash is likely higher including the rest of its affiliates. The company said in a court filing last month that FTX raised $1.8 billion through Dec. 8 by selling off some of the firm’s digital assets. FTX also said that it’s conducting Bitcoin derivative trades to hedge exposure to the coin and generate additional yield on its digital holdings — and is exploring options to potentially restart the exchange. An uptick in FTX’s cash stockpile has coincided with the rising value of customer accounts. Since FTX unraveled in November 2022, bankruptcy advisers have been tracking down assets and struck deals intended to benefit customers who had smaller accounts on the platform. The company has also brought major lawsuits against former associates of Sam Bankman-Fried and crypto firms like Bybit Fintech Ltd. that withdrew funds from FTX before it filed chapter 11. Customer claims worth more than $1 million traded at around 73 cents on the dollar as of Friday, up from around 38 cents on the dollar in October, according to investment firm and bankruptcy claims broker Cherokee Acquisition. Actual trading prices depend on the value of a specific claim and other factors, Cherokee Acquisition said. Read more.
In related news, Rashit Makhat was paid close to $500 million months before FTX collapsed when he sold most of his stake in a bitcoin-mining enterprise, Genesis Digital Assets, to Bankman-Fried’s hedge fund, the Wall Street Journal reported. Makhat’s lawyers in London say he remains in possession of the proceeds. The peak-of-market deal made Makhat one of the biggest individual beneficiaries of what U.S. prosecutors in Bankman-Fried’s recent trial called a “spending spree” of money Bankman-Fried stole from FTX customers. In pressing their case, prosecutors used details such as bank-account data and testimony from insiders to show how much of the $8 billion of customer money went into startups and other investments. Bankman-Fried was convicted and is in custody awaiting sentencing. The early 2022 Genesis Digital deal was among the largest highlighted by prosecutors, who displayed to jurors a diagram showing how more than $1 billion of funds went from customers to an account owned by Bankman-Fried’s hedge fund and then into Genesis Digital shares. Prosecutors didn’t mention Makhat, who hasn’t been accused of wrongdoing. Prosecutors also singled out Bankman-Fried-led deals including Bahamas property purchases and $1.2 billion that went toward buying out the rival crypto exchange Binance, which had been an FTX shareholder. Read more. (Subscription required.)
