“A substantial amount” of assets were stolen



NEW YORK (AP) — Lawyers for FTX revealed on Tuesday that a “substantial amount” of assets had been stolen from the collapsed cryptocurrency exchange’s accounts, diminishing the chances of its millions of investors recovering their silver.

The admission came in FTX’s first court appearance since the company filed for bankruptcy protection on Nov. 11. Such hearings usually take place a few days after a filing, but this one was delayed because FTX’s collapse came suddenly and management kept little to no records.

“This company was run by people who were inexperienced, unsophisticated and potentially personally compromised,” said James Bromley, a partner at Sullivan & Cromwell, the law firm hired by FTX’s creditors to lead the company through bankruptcy. “This is one of the sharpest and most difficult corporate collapses in American corporate history.”

Billion-strapped FTX filed for bankruptcy protection after the exchange experienced the crypto equivalent of a bank run. The company estimates that there are more than 100,000 claims against it to date, and that number is expected to top one million once the bankruptcy case is settled.

However, recovering all these funds has become increasingly difficult. In the days following FTX’s collapse, hundreds of millions of dollars worth of cryptocurrencies were transferred from FTX accounts to other cryptocurrency wallets. Although there have been reports that some of these funds may have been seized by the government of the Bahamas – where FTX is headquartered – as part of its own investigation, the bulk of these cryptocurrencies have transited through different wallets, in what appears to be the crypto equivalent of money laundering.

In court, FTX lawyers admitted that a “substantial amount” of assets were stolen from FTX accounts.

“We understand the concern and the outrage, and we are working day and night to bring order to the mess,” Bromley said.

FTX’s bankruptcy has generated substantial interest beyond just cryptocurrency investors. The company also had major sports sponsorships, including agreements with Formula One racing and Major League Baseball. FTX had the naming rights to a sports arena in Miami, and several celebrities have either invested in FTX or entered into sponsorship deals with the company.

Nearly 700 people were in U.S. Bankruptcy Judge John Dorsey’s Zoom meeting room on Tuesday, and the hearing was also streamed on YouTube.

Judge Dorsey temporarily granted FTX an order that had caused some controversy: the removal of names and addresses from FTX’s client list. Generally, in bankruptcy law, all claims against a bankrupt company are public. But FTX lawyers argued that protecting the identity of FTX customers – at least on an interim basis – was necessary to prevent possible future thefts of FTX accounts.

Dorsey granted temporary deletion of FTX customer names and information, hoping to publish those names once the case is finalized.

Source link


Comments are closed.