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How much of FTX’s debt has been recovered so far?

How much of FTX’s debt has been recovered so far?

How much of FTX’s debt has been recovered so far?
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By CNBCTV18.com Jan 25, 2023 7:40:10 PM IST (Published)

FTX filed for Chapter 11 bankruptcy as the exchange failed to meet the withdrawal demands of customers. For his involvement in the entire fiasco, SBF was subsequently slapped with various charges by the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC) and the US Department of Justice (DOJ). Since then, the crypto community has been eagerly awaiting a verdict on the case.

The FTX collapse was one of the most shocking incidents in the history of cryptocurrencies. FTX, founded by ex-CEO Samuel Bankman-Fried (SBF), was the second-largest centralised cryptocurrency exchange in the world, handling billions of dollars’ worth of user funds.

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However, on November 11, 2022, FTX filed for Chapter 11 bankruptcy as the exchange failed to meet the withdrawal demands of customers. For his involvement in the entire fiasco, SBF was subsequently slapped with various charges by the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC) and the US Department of Justice (DOJ). Since then, the crypto communiFTX filed for Chapter 11 bankruptcy as the exchange failed to meet the withdrawal demands of customers. For his involvement in the entire fiasco, SBF was subsequently slapped with various charges by the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC) and the US Department of Justice (DOJ). Since then, the crypto community has been eagerly awaiting a verdict on the case.ty has been eagerly awaiting a verdict on the case.
At the same time, hundreds of thousands of investors are paying close attention to the court proceedings, wondering if they will ever get any of their funds back.  Fortunately, prosecutors on the case and FTX’s restructuring team have managed to seize/recover a significant amount of funds linked to the exchange and its founder, SBF. Here's a look at some of these seized/recovered funds and what they mean for investors of the ill-fated crypto exchange.
Robinhood shares seized
Federal prosecutors revealed that, between January 1 and January 20, they had seized more than $698 million worth of funds tied to FTX founder, Sam Bankman-Fried. These findings were released as part of a January 20 court filing submitted by US Attorney Damian Williams.
Most of the seized funds consisted of Robinhood stock; 55.3 million shares to be precise, which are worth roughly $525 million at current prices. These shares were held by an Antigua-based shell company called Emergent Fidelity Technologies, which was set up by SBF and FTX co-founder Gary Wang.
Prosecutors also seized accounts containing $100 million and $50 million held by Silvergate Bank and Farmington State Bank respectively. These accounts were allegedly affiliated with FTX Digital Markets, FTX's Bahamas-based business.
Restructuring team claws back $5.5 billion
In another positive development, FTX’s restructuring team stated that they were able to recover $5.5 billion in cash, crypto holdings and other assets. These details were released by FTX's lead attorney Adam Landis as part of a January 11 court hearing in Delaware.
According to Landis, nearly $3.5 billion of the recovered funds consisted of crypto assets, including $268 million in BTC, $245 million in stablecoins and $42 million worth of Dogecoin. The lawyers also stated that $1.2 billion dollars' worth of FTX’s crypto assets were held at other crypto exchanges.
The restructuring team also stated that these crypto assets can be easily converted for cash. However, the size of the holdings was so large that they could influence prices if sold on the open market.
FTX gets the nod to offload regional outfits and other subsidiaries
On January 13, a judge overseeing the FTX proceedings gave the restructuring team the go-ahead to sell some of its subsidiaries and regional arms. These include FTX Japan and FTX Europe, along with equities-trading platform Embed Technologies and derivatives exchange, LedgerX LLC.
The court placed the investment bank, Perella Weinberg, in charge of the sale process. It also set bid deadlines of January 18, January 25 and February 1 for Embed, LedgerX and the other two FTX arms, respectively. According to Kevin Cofsky, a partner at Perella, the investment bank had received bids from nearly 120 interested parties. The sale of these assets is expected to bring a significant amount of funds back into FTX coffers.
But will it be enough to cover customer debt?
According to estimates, there are over nine million FTX customers who are owed between $1 billion and  $10 billion collectively. If these estimates are to be believed, the recovered/seized amounts do not come close to the debt owed.
However, it has only been a couple of months since FTX filed for bankruptcy. As such, there is always hope for additional recoveries in the months to come. Moreover, the sale of the FTX subsidiaries and regional arms could also rake in a substantial amount of funds. However, it is unclear just how much money the sales will bring in. The only thing certain is that FTX debtors have a multiyear court proceeding before they see any funds being returned. Until then, all we can do is wait and watch.
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