FTX Crypto Assets Worth $740 Million Found So Far, Court Claims Show
The company tasked with shutting down failed cryptocurrency exchange FTX says it has been able to recover and protect $740 million (roughly Rs. 6,040 crore) in assets so far, half of the billions of dollars that may not be in the company’s coffers. . .
The numbers were disclosed Wednesday in court filings by FTX, which hired cryptocurrency storage firm BitGo hours after FTX filed for bankruptcy on Nov. 11.
The main concern of many FTX customers is that they will never see their money again. FTX failed because its founder and former CEO Sam Bankman-Fried and his executives used client assets to bet on FTX’s closely related trading company, Alameda Research. Bankman-Fried was reportedly seeking over $8 billion (roughly Rs. 65,330 crore) from new investors to fix the company’s balance sheet.
Bankman-Fried “proved that there is no such thing as a ‘safe’ conflict of interest,” BitGo CEO Mike Belshe said in an email.
The figure of $740 million (approx. Rs. 6,040 crore) is from November 16. BitGo estimates that the amount of assets acquired and secured is likely to increase to more than $1 billion (approx. Rs. 8,170 crore) from that date.
The assets found by BitGo are now locked in South Dakota in what is known as “cold storage,” meaning they are cryptocurrencies stored on hard drives that are not connected to the Internet. BitGo provides what are known as “qualified custodian services” under South Dakota law. It is basically the crypto equivalent of a financial fiduciary, offering segregated accounts and other security services to secure digital assets.
Several crypto companies have failed this year as Bitcoin and other digital currencies have dropped in value. FTX failed when it received the crypto equivalent of the bank’s operations, and an early investigation found that FTX employees were linked to assets held for clients whose assets they were investing.
“Trade, financing and custody must be separate,” said Belshe.
Assets recovered include not only Bitcoin and Ethereum, but also a collection of smaller cryptocurrencies that vary in popularity and value, such as the shiba inu coin.
California-based BitGo has a history of recovering and securing assets. The company was tasked with securing assets after cryptocurrency exchange Mt. Gox failed in 2014. It is also the custodian of assets held by the government of El Salvador as part of that country’s research into using bitcoin as legal tender.
FTX pays Bitgo $5 million (roughly Rs. 40 crore) and $1,00,000 (roughly Rs. 81 lakh) per month for its services.
