FTX: 'Massive Shortfall' in Liquid Assets Far Worse Than Thought
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FTX: 'Massive Shortfall' in Liquid Assets Far Worse Than Thought

Created 1yr ago, last updated 1yr ago

The post-bankruptcy management of Sam Bankman-Fried's FTX exchange has found less than $700 million in highly liquid assets against $10.5 billion owed to customers.

FTX: 'Massive Shortfall' in Liquid Assets Far Worse Than Thought

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FTX's new management has found assets worth less than 7% of what the bankrupt exchange owes its customers.

In a preliminary analysis prepared for the court, FTX has been able to locate just $694 million worth of "Category A" liquid assets like cash, stablecoins and Bitcoin. It owes customers $10.54 billion.

Which is to say, FTX is short $9.47 billion. It noted:

"There is a massive shortfall at the FTX exchange [that is] especially pronounced for Category A assets. Only a small amount of cash, stablecoins, BTC , ETH and other Category A assets remain in wallets preliminarily sourced to the FTX.com exchange… The shortfall is smaller at FTX.US but still significant."

Other FTX-related companies, most notably Bankman-Fried's private trading firm Alameda Research, owe $13 billion.

Adding in Category B assets of more questionable liquidity and value in the amount of $1.46 billion, the company is about $8.7 billion short.

Still Bad at FTX.US

FTX.US has $190 million in Category A assets and owes $335 million — a shortfall of $116 million. It has no Category B assets.

Since he resigned as CEO, Bankman-Fried has stated a number of times that FTX.US should be about $350 million in the black.

Last week, prosecutors added more charges against him, bringing the total number Bankman-Fried is facing to 12.
On Feb. 28, FTX engineering head Nishad Singh became the third top FTX/Alameda executive to plead guilty to fraud charges and agree to testify against Bankman-Fried. Co-founder Gary Wang and Alameda CEO Caroline Ellison have already pleaded guilty.

Along with everything else, the immediate post-bankruptcy hack saw another $293 million drained from FTX and $139 million from FTX.US, the report noted.

"It has taken a huge effort to get this far," said John Ray III, the CEO and chief restructuring officer of the FTX Debtors in a statement. He added:

"The exchanges' assets were highly commingled, and their books and records are incomplete and, in many cases, totally absent. For these reasons, it is important to emphasize that this information is still preliminary and subject to change. We believe it is more important to provide transparency to stakeholders by making this information public now than to wait until we can achieve certainty."
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