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The company tasked with locking down the assets of the failed cryptocurrency exchange FTX says it has managed to recover and secure $740 million in assets so far, a fraction of the potentially billions of dollars likely missing from the company’s coffers, the Associated Press reported. The numbers were disclosed on Wednesday in court filings by FTX, which hired the cryptocurrency custodial company BitGo hours after FTX filed for bankruptcy on Nov. 11. The biggest worry for many of FTX’s customers is they’ll never see their money again. FTX failed because its founder and former CEO Sam Bankman-Fried and his lieutenants used customer assets to make bets in FTX’s closely related trading firm, Alameda Research. Bankman-Fried was reportedly looking for upwards of $8 billion from new investors to repair the company’s balance sheet. The $740 million figure is from Nov. 16. BitGo estimates that the amount of recovered and secured assets has likely risen above $1 billion since that date. The assets recovered by BitGo are now locked in South Dakota in what is known as “cold storage,” which means they’re cryptocurrencies stored on hard drives not connected to the internet. BitGo provides what is known as “qualified custodian” services under South Dakota law. It’s basically the crypto equivalent of financial fiduciary, offering segregated accounts and other security services to lock down digital assets.

Collapsed cryptocurrency exchange FTX remains the subject of "an active and ongoing investigation" by Bahamian authorities, Bahamian Attorney General Ryan Pinder said on Sunday, as he praised the Bahamas' regulatory regime and swiftness with which it responded to the crisis, Reuters reported. FTX, which had been among the world's largest cryptocurrency exchanges, is headquartered in the Bahamas. The firm, whose liquidity crunch forced the company to declare bankruptcy on Nov. 11, is the subject of investigations by Bahamian and U.S. authorities. In mid-November, the Royal Bahamas Police said that government investigators in the Bahamas were looking at whether any "criminal misconduct occurred." "We are in the early stages of an active and ongoing investigation," Pinder said on Sunday, according to prepared remarks for the speech. "It is a very complex investigation." He said it involved both civil and criminal authorities. Pinder said that the Bahamas Securities Commission, Financial Intelligence Unit and the police's Financial Crimes Unit would "continue to investigate the facts and circumstances regarding FTX's insolvency crisis, and any potential violations of Bahamian law."

Cryptocurrency flows through a largely unregulated financial system every day and the industry answers to no governmental authority, according to a WSJ Pro Bankruptcy commentary. These upstarts pride themselves on sticking it to the established financial system. And yet, some of the most celebrated crypto executives have revealed themselves to be far worse guardians of capital than their traditional counterparts, according to the commentary. FTX, along with other crypto platforms, touted itself as a better option than traditional banks and brokerages all with little to no internal or regulatory oversight. As was laid bare in a U.S. bankruptcy court on Tuesday, the exchange’s ousted co-founder Sam Bankman-Fried took control of customers’ money and put it in undisclosed risky investments. He and his inner circle also appear to have been entangled in the business, in a way a lawyer for the firm described as “a personal fiefdom” of Mr. Bankman-Fried. FTX’s sister company, Alameda Research LLC, lent Mr. Bankman-Fried $1 billion, the company used corporate funds to buy swanky properties for senior staff in the Bahamas without proper record-keeping and bosses approved expenses using emoji, according to the firm’s new management. All this only came out once the firm collapsed into bankruptcy and the world got the first glimpse into its affairs. The digital-assets sector ballooned in the last decade to a peak of roughly $3 trillion globally last year. That growth has mostly taken place under the banner of building a decentralized financial system to upend traditional systems, where a handful of mega banks and broker dealers control the vast majority of financial transactions. Read more.

*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.

The ongoing mediation between the Roman Catholic Diocese of Albany and attorneys for hundreds of plaintiffs who filed sexual abuse claims under the Child Victims Act is teetering on collapse, the Albany Times Union reported. One of two mediators overseeing the negotiations, which have languished for months, described them as a "complete and total waste of time." That analysis by Paul A. Finn, a Massachusetts attorney who oversaw the settlement of 552 cases of sexual abuse against the Archdiocese of Boston, came during a court conference last week when leaders of a committee representing dozens of plaintiffs' attorneys informed the diocese's attorney they should file for bankruptcy if they can't provide a meaningful offer by Tuesday. Cynthia S. LaFave, an attorney on the plaintiffs liaison committee, said they have been waiting since July for the diocese to offer what they expect to be a figure in the hundreds of millions of dollars for a fund that would be used to settle and pay damages to the hundreds of alleged victims. "We do not see the previous offer as a realistic offer," LaFave said of a deal put forth by the diocese in July. She added that if the diocese believes the undisclosed offer made four months ago is fair, "then they might as well just file for bankruptcy now — because there is not a single plaintiff’s attorney that will agree with that analysis."

A medical clinic in Johnson County filed for bankruptcy after facing a $75 million malpractice judgment to parents of a newborn who suffers permanent brain damage, the Daily Iowan reported. In 2018, the newborn sustained serious brain damage after his birth at Mercy Hospital in Iowa City after health care providers allegedly improperly used forceps and a vacuum, crushing the baby’s head during delivery. The parents of the newborn, Kathleen and Andrew Kromphardt, sued Mercy Hospital of Iowa City, Obstetric and Gynecologic Associates of Iowa City and Coralville and Jill Goodman, an obstetrician-gynecologist and one of the directors of the Coralville clinic. A Johnson County jury awarded more than $98 million in March to the family for the clinic’s malpractice and negligence throughout the child’s pregnancy, labor, and birth. The jury found Mercy Hospital and the Coralville clinic to each be 50 percent at fault in the case. Mercy Hospital’s liability was capped at $7 million in a pre-trial agreement with the parents, which they paid shortly following the trial. Coralville clinic is liable for the remainder of the award.

A substantial amount of FTX’s assets are either missing or stolen, a lawyer for the failed crypto exchange said in court, vowing to cast a wide net to secure potentially billions of dollars in funds that passed through the firm he called the “personal fiefdom” of co-founder Sam Bankman-Fried, the Wall Street Journal reported. Yesterday’s hearing marked an inflection point for FTX’s bankruptcy case as its new leaders begin chasing down what assets they can salvage and trying to determine who might be responsible for the loss of customers’ money. “FTX was in the control of inexperienced and unsophisticated individuals, and some or all of them were compromised individuals,” said James Bromley, counsel to FTX’s new management, at its first appearance in Delaware bankruptcy court after filing the largest-ever crypto chapter 11 case earlier this month. The new management is only beginning to take stock of how much FTX lost under Mr. Bankman-Fried on risky trading bets, and it has assembled a team of investigators to lead a global hunt for money that left FTX before it failed. Prosecutors in New York and the U.S. Securities and Exchange Commission are examining the firm’s collapse, which unleashed a new wave of financial stress in the cryptocurrency industry. Customers’ funds on the exchange are frozen, and they are losing hope they will ever get much back. The size of the gap between FTX’s obligations to its customers and available assets it could use to help pay them still isn’t known, though Mr. Bromley said its individual and institutional customers number in the millions. The 50 largest creditors alone are owed more than $3 billion, court papers show.

Long before Sam Bankman-Fried’s FTX cryptocurrency empire collapsed this month, it already was on the radar of federal prosecutors in Manhattan, Bloomberg News reported. The U.S. Attorney’s Office for the Southern District of New York, led by Damian Williams, spent several months working on a sweeping examination of crypto currency platforms with U.S. and offshore arms and had started poking into FTX’s massive exchange operations, according to people familiar with the investigation. The focus was on compliance with the Bank Secrecy Act, the people said. Authorities have used the law, requiring financial institutions take steps to prevent money laundering and terrorism financing, to go after crypto platforms that allegedly falsely claimed that they don’t serve U.S. customers. Bahamas-based FTX operated one of the world’s largest international crypto exchanges, as well as a separate and much more limited venue called FTX US that said it complies with the act.

Sam Bankman-Fried's FTX, his parents and senior executives of the failed cryptocurrency exchange bought at least 19 properties worth nearly $121 million in the Bahamas over the past two years, official property records show, Reuters reported.
Separately, attorneys for FTX said on yesterday that one of the company's units spent $300 million in the Bahamas buying homes and vacation properties for its senior staff, and that FTX was run as a "personal fiefdom" of Bankman-Fried. No further details were given. Most of FTX's purchases registered in the documents seen by Reuters were luxury beachfront homes, including seven condominiums in an expensive resort community called Albany, costing almost $72 million. The deeds show these properties, bought by a unit of FTX, were to be used as "residence for key personnel" of the company. Reuters could not determine who lived in the apartments.

FTX is expected to make its debut appearance today in the U.S. Bankruptcy Court for the District of Delaware, where its new management is expected to recount events leading up to the cryptocurrency platform’s sudden collapse and explain the steps it has since taken to secure customer funds and other assets, WSJ Pro Bankruptcy reported. FTX’s lawyers are advancing an unprecedented chapter 11 case marked already by allegations of major failures against its former leadership and a budding jurisdictional dispute with the government of the Bahamas, where the firm’s inner circle ran its doomed crypto operation. Contagion is still spreading from the failure of FTX, and the impact on its one million estimated customers won’t be known for some time. FTX's new management is now seeking to pay a cybersecurity services provider and other vendors involved in running its business operations. The firm is also seeking to establish a new system to manage its remaining cash and keep employees on the payroll during bankruptcy. That may not be an easy task. FTX advisers said in court papers that it suffered “extraordinary attrition” before filing chapter 11 last week. The new management is also expected to update the court on an emerging dispute with public officials in the Bahamas, where FTX founder and former chief executive Sam Bankman -Fried resides. Tuesday’s hearing could also provide additional information on transfers that were made out of FTX following the chapter 11 filing.