John J. Ray III Fires Back Against SBF’s ‘Delusional’ Claims Customers Lost No Money in FTX Collapse
FTX customers could get $9B shortfall claim payout by mid-2024
A proposed settlement could see creditors receive a shortfall claim of $8.9 billion for FTX.com and $166 million for FTX US.
FTX Fires Back at Creditors ‘Willing to Gamble Estate Assets on Higher Returns’
The committee of unsecured creditors criticized the bankrupt estate’s reorganization plan submitted to court in July.
FTX Bankruptcy Team Says the Exchange Owed Customers $8.7B
Commingling and misuse of customer and corporate funds occurred from the inception of FTX, says current CEO John J. Ray III.
FTX CEO’s Legal Billings Continue to Hint at ‘2.0 Reboot’
John Ray III billed just over 6.5 hours in his last cycle reviewing and working on what appears to be FTX 2.0 materials
Alameda-Linked Wallet Sent $100M of Stablecoins to Trading Firms After USDC Depeg
A wallet linked to the liquidators of the Alameda Research estate sent $100 million in stablecoins to crypto trading firms Cumberland and GSR Markets over the weekend.
Lawyers picnic: FTX counsel and advisors rake in $34M in January
Millions have been invoiced from a host of law firms, investment bankers, consultants and financial advisers in FTX’s bankruptcy case.
FTX Bankruptcy Special Counsel and Advisers Bill $38M for January
FTX’s bankruptcy proceeding has teams of lawyers, investment bankers, consultants, and financial advisers working on the case.
FTX Has ‘Massive Shortfall’ in Assets, Say Bankruptcy Lawyers
So far, $2.2 billion in assets have been identified in the wallets of accounts associated with FTX.com, of which only $694 million are in the most liquid assets.
Sam Bankman-Fried Addresses $8 Billion Balance Sheet Deficit, The Key Takeaway
The entire crypto market bled with multiple losses and asset devaluation after the collapse of Sam Bankman-Fried’s crypto exchange FTX. In addition, crypto firms exposed to FTX got a fair share of the bitter pill.
Investigations have been ongoing to determine the location of the $8 billion hole in FTX’s balance sheet, which caused the liquidity crunch.
The deficit in FTX’s balance sheet kept growing. The firm initially declared only $2 billion and later said it was $5 billion. The hole has now grown to over $8 billion.
In a recent Bloomberg interview, Sam Bankman-Fried (SBF), FTX former CEO, revealed the whereabouts of the funds. SBF said he showed investors a separate balance sheet at an emergency bailout.
According to the report, SBF listed $8.9 billion in debt, $9 billion in liquid assets, and $15.4 billion in less liquid assets. The report also mentioned $3.2 billion in illiquid assets.
Sam Bankman-Fried Reveals Conflicting Balance Sheets
He revealed another balance sheet showing the actual situation at the time of the bailout meeting. The balance sheet bears similar numbers but $8 billion less liquid assets. SBF said he misquoted the numbers.
He added that customers were transferring money to Alameda Research instead of sending it directly to FTX. According to his statement, FTX’s internal audit system double-counted the amount and credited it to both firms.
Following SBF’s statement, FTX and Alameda Research had the highest cash flow, but Binance, a rival, became the highest expense. He paid a net amount of $2.5 billion to buy out Binance’s investments. SBF also revealed that he spent $250 million on real estate and about $1.5 billion on other expenses.
Some $4 billion and $1.5 billion went into venture capital investments to acquire other firms, while they counted $1 billion by mistake.
The report also stated that SBF and the remaining employees spent the previous weekend attempting to raise funds. The funds are to fill the $8 billion hole in FTX’s balance sheet and repay customers.
Cause of FTX Collapse: Fraud Or Mismanagement?
Meanwhile, most people in the crypto space say the FTX crisis is a fraud and not an accident. On Wednesday, during his first public appearance after the collapse of FTX, Bankman-Fried insisted that he did not commit fraud. He claimed that he was unaware of the extent of damage and what was going on with FTX.
In an interview with The New York Times, SBF blamed the collapse of the $32 billion FTX exchange on poor accounting and management failures. This comment triggered civil and criminal investigations. The investigation aims to determine whether FTX committed a crime by lending customers’ funds to Alameda Research.
However, FTX’s new CEO, John Ray III, in charge of the firm’s bankruptcy proceeding, expressed disgust at the situation. In his words, Ray said he had never seen such a complete failure of corporate control, condemning SBF for unacceptable management practices.
Featured image from Texas Tribune, chart from TradingView.com