FTX recovers most of the stolen customer funds, still faces challenges

by Jun 27, 2023CryptoNews0 comments

FTX, the crypto exchange that collapsed in April after its former CEO Sam Bankman-Fried (SBF) and other executives allegedly misappropriated billions of dollars of customer deposits, has made significant progress in recovering the lost assets. According to the second interim report by the FTX Debtors, the group of entities that took over FTX after its downfall, FTX has recovered about $7 billion in liquid assets so far and is continuing to search for additional assets 

The FTX Debtors estimate that the total amount of customer assets that were commingled and misused by the former FTX leadership is $8.7 billion, mostly in fiat and stablecoins. This means that FTX still has almost $2 billion to go to cover the misappropriations 

The report also reveals the extent of the chaos and deception that characterized the former FTX operations. The former FTX leadership, with the assistance of a senior FTX Group attorney, allegedly hid their actions from banks, regulators, customers, and even the U.S. Congress. They used false representations, shell companies, and complex transactions to divert customer funds to their own personal and business interests, such as political and charitable donations, luxury real estate, investments, and acquisitions 

The report also shows a diagram of the flows of customer money out of primary deposit accounts, which illustrates how difficult it is to trace and recover the assets. The report states: “Notwithstanding extensive work by experts in forensic accounting, asset tracing and recovery, and blockchain analytics, among other areas, it is extremely challenging to trace substantial assets of the Debtors to any particular source of funding, or to differentiate between the FTX Group’s operating funds and deposits made by its customers.” 

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The report also claims that the former FTX leadership informally tracked the size of FTX.com’s undisclosed liability to customers, which ranged from $8.9 billion to $10 billion, higher than the FTX Debtors’ estimate 

The FTX Debtors are working to restore trust and confidence in the crypto space and to compensate the affected customers as soon as possible. They are also cooperating with various authorities and regulators to hold the former FTX leadership accountable for their actions

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