Source: Adobe Stock / brizmakerA "substantial amount" of crypto exchange FTX's failed assets are missing or stolen, the exchange's lawyer said in court.
According to the Wall Street Journal, this statement was made by the said James Bromley, a lawyer for FTX's new management, during a bankruptcy hearing on Tuesday.
According to the report, the new management is looking for all recoverable assets, but is also looking for those responsible for the loss of client funds.
According to Bromley, the former executive showed a complete lack of professionalism in managing billions of dollars in crypto assets from users. He later described the FTX crash as follows:
"One of the sharpest and most difficult collapses in American corporate history and in corporate history around the world."
Bromley said the new management would "cast a wide net" to secure what could be billions of dollars in funds flowing through the company, which he described as its founder's "personal fiefdom", saying:
"What we have here is a global and international organization, but it was run as a personal fiefdom by Sam Bankman-Fried."
The lawyer said earlier this month, in his first court appearance after the bankruptcy filing, that,
"FTX was under the control of inexperienced and unsophisticated people, and some or all of them were compromised people."
fundraising
The report suggests that the new management is still assessing how much FTX actually lost under Bankman-Fried. The size of the gap between FTX's obligations to its users and the available assets it could use to help pay them is still unknown.
Bromley said the exchange's individual and institutional clients number in the millions, while the top 50 creditors alone owe more than $3.000 billion, according to court documents.
Some of FTX's assets are outside of the United States, including the Bahamas, where FTX was officially headquartered.
Therefore, management decided to form a team of investigators to "conduct a global search for the money that left FTX before it failed."
FTX officials said it would take months to review customer complaints and bad bets from its parent company, Alameda Research. Some divisions appear to be creditworthy, they said, although it could take until January next year to produce a full balance sheet detailing the company's total assets and liabilities.
The Wall Street Journal stated that,
“The company has located approximately €1.400 billion in cash it claims to belong to the business, more than double the figure declared in a court report last week. Recoverable units could be sold in the event of bankruptcy.
The judge said Tuesday that he would grant a series of motions filed by FTX to help the company manage its bankruptcy. This includes removing the identities of clients whose funds are frozen on the exchange.
Meanwhile, as reported, FTX, Bankman-Fried's parents and top company executives have purchased at least 19 properties worth approximately €121 million in the Bahamas over the past two years. FTX Property Holdings bought 15 properties worth around €100 million in 2021 and 2022, according to a Reuters report, citing official property records.
The Bahamas dilemma
As noted, some FTX assets are stuck in the Bahamas, where financial authorities seized digital assets from FTX's local operations earlier this month. Officials claimed it was done through unauthorized access to their corporate network.
The Bahamas Securities and Exchange Commission said the coins were transferred to a government-controlled wallet "for safekeeping" in accordance with local laws.
Lawyers representing the liquidators said in court on Tuesday that they disagreed with Bromley's characterization that US-based subsidiaries controlled certain client funds.
"We have disagreements that we will resolve over time," said Christopher Shore, the Bahamian liquidators' federal prosecutor.
Simone Morgan-Gomez, a partner at Callenders & Co., based in the Bahamas but not involved in the case, said that,
"A liquidation of this magnitude will probably take a few years."
Court documents filed, according to the report, showed a rare culture of record-keeping at the defunct stock exchange, as well as disagreements between its US executives and Bahamian liquidators over who should control the company's assets and distributions to them. creditor investors.