FTX bankruptcy team finds more than £1bn across Bankman-Fried’s crypto empire
The team overseeing the bankruptcy of collapsed crypto exchange FTX has managed to located more cash held by Sam Bankman-Fried’s sprawling crypto empire, bringing the total to $1.24bn (£1.04bn).
Insolvency veteran John Ray III, who oversaw the post-collapse restructuring of Enron, has been called in to manage the winding up of the crypto bourse and recover funds for its swelling list of creditors
In court filings seen by the Financial Times, an executive at consultancy firm Alvarez & Marsal working on FTX’s bankruptcy said they had tracked down “substantially higher cash balances” than previously thought at the firm.
The new cash findings reportedly include around $400m in accounts linked to FTX’s sister firm Alameda Research, the FT reported, and push the total to $1.24bn.
It comes after court filings over the weekend revealed that the firm estimated it had around $564m in cash in the bank after assessing the amount held in 144 accounts linked to FTX and its affiliate firms. 216 accounts had so far been linked to the exchange.
The findings provide a glimmer of hope that some of the firm’s huge base of creditors – which could top one million – may see some cash payouts from the firm.
FTX has left customers and creditors facing billions of dollars of losses so far, however. Regulators have begun circling the firm to investigate potential fraud and misuse of customer funds by Bankman-Fried and his top team.
The 30-year old former billionaire told a reporter at Vox last week that his team “basically forgot” about accounts holding $8bn in customers’ cash.
In court filings, John Ray slammed the firm for a “complete failure of corporate controls” and “absence of trustworthy information” and said the management was the worst he had seen in 40+ year career.
The collapse has sent shockwaves through the crypto sector and fuelled regulatory fears of global contagion.
The deputy governor of the Bank of England warned yesterday that watchdogs need to tighten oversight of the firms before they threaten to rupture the stability of the mainstream system.
“We should not wait until it is large and connected to develop the regulatory frameworks necessary to prevent a crypto shock that could have a much greater destabilising impact,” Jon Cunliffe said.