Bankrupt digital currency exchange FTX has reportedly recovered more than $7.3 billion in cash and liquid digital assets. This represents an apparent increase of over $800 million since January 2023. That's according to a Reuters report citing the company's lawyer (who shared his comments during a U.S. bankruptcy court hearing in Delaware on Wednesday).
Andy Dietderich, FTX's legal representative, said the company began to consider its future plans after several months of ongoing efforts to secure key resources and try to determine exactly what happened under former so-called leadership, including indicted founder Sam Bankman. What went wrong - fried. As widely reported, Bankman-Fried has pleaded not guilty to the charges.
Dietderich noted that the situation "has stabilized and the dumpster fire has been extinguished," According to Reuters, FTX appears to be benefiting from a surge in cryptocurrency prices,
The company could be worth around $6.2 billion on a full recovery. That’s reportedly based on cryptocurrency prices dating back to November, when the company filed for bankruptcy after cryptocurrency traders withdrew $6 billion from the exchange within days and rival Binance backed out of a possible bailout. FTX’s current CEO, John Ray, commented on the failed crypto asset platform’s improper remittances and very poor accounting practices, calling it a “total failure” of controls.
Dietderich revealed that FTX is currently negotiating with various stakeholders on available options for potentially relaunching its crypto business as the company lays out plans for the foreseeable future, and could make a key decision on the move this quarter. However, he did not provide many details on what the restart would actually mean for FTX users whose crypto asset deposits were locked up in bankruptcy proceedings.
Notably, FTX clients residing in Japan have been able to withdraw funds, as the Asian country’s crypto regulations provide sufficient support, Dietderich claimed.
It is worth noting that FTX will need a lot of money to restart its exchange, because the current user interface has little connection with the flow of funds behind the scenes, the lawyer revealed.
He added that the app "works beautifully, but really it's just a facade." Dietderich acknowledged that it’s not entirely clear whether FTX will use its own assets to relaunch the company, rather than using the funds to repay clients. Restarting a cryptocurrency exchange may require outside financing and possibly even the sale of the company’s existing assets.
For now, Dietderich claims, FTX is focused on initial plans for Chapter 11, which could provide the company a path out of bankruptcy. FTX plans to submit the plan later this year, but said various details may need to be further worked out. That's because corporate creditors are fighting for their fair share of the exchange's assets.
As clarified in the update, FTX does not expect any plans for Chapter 11 to be approved until the second quarter of next year. SBF and other company insiders have now been indicted for fraudulent activity and their alleged involvement in the company's collapse. But in stark contrast to SBF's not guilty plea, other former executives have pleaded guilty and agreed to cooperate with authorities.
