FTX Bankruptcy Team Releases Second Investigative Report; $7B Recovered

FTX Bankruptcy Team Releases Second Investigative Report; $7B Recovered

FTX’s bankruptcy team tasked with recovering customer funds released a new report yesterday (Monday) showing the
collapsed cryptocurrency exchange has so far recovered $7 billion out of the
$8.7 billion owed to customers.

According to the report,
the extensive commingling of funds complicates the efforts to recover the
remaining amount. The company’s previous management had hidden its actions with the
assistance of a senior attorney as early as August 2022, the team claimed.

FTX’s Alleged
Misappropriations

Additionally, the report explained about $6.4
billion of the funds that FTX owed to its customers were in fiat currency and
stablecoins which were reportedly misappropriated. Besides the $7 billion which
has since been
recovered, the bankruptcy team said it
was expecting more recoveries.

The assets claimed to
have been misappropriated were reportedly used for
speculative trading, venture investments, and acquisitions. Moreover, the funds
were used for political donations, charitable donations, and investments
in luxury real estate in the Bahamas, described the report.

„Notwithstanding extensive
work by experts in forensic accounting, asset tracing and recovery, and
blockchain analytics, among other areas, it is extremely challenging to trace
substantial assets of the debtors to any particular source of funding or to
differentiate between the FTX Group’s operating funds and deposits made by its
customers,” said John Ray, the CEO of FTX who is tasked with recoveries.

The 33-page document accused FTX’s top management and at least one senior attorney saying:
„They lied to the banks and auditors, executed false documents, and moved
the FTX Group from jurisdiction to jurisdiction, taking flight from the US to
Hong Kong to the Bahamas, in a continual effort to enable and avoid detection
of their wrongdoing.”

’False Testimony’

Additionally, Ray’s team
claims that Sam
Bankman-Fried gave
false testimony before Congress about how his company protected customer funds.
Earlier, in a separate press release, Bankman-Fried had claimed that the protection of
customers was the top priority at the exchange.

The
report is the second filing by Ray after disclosing accounting failures in
an initial examination described inadequate
management control under Bankman-Fried’s watch. FTX is
going through bankruptcy in Delaware, while Bankman-Fried is facing
criminal charges and is
expected to appear in court in October, Finance
Magnates reported.

This article was written by Jared Kirui at www.financemagnates.com.

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