FTX reports $415 million in hacked crypto, Bankman-Fried says FTX US is
solvent
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[January 18, 2023] By
Dietrich Knauth
(Reuters) - Bankrupt crypto exchange FTX said in a report to creditors
on Tuesday that about $415 million in cryptocurrency had been stolen in
hacks.
FTX has said it had recovered over $5 billion in crypto, cash and liquid
securities, but that significant shortfalls remained at both its
international and U.S. crypto exchanges. FTX attributed some of the
shortfall to hacks, saying that $323 million in crypto had been hacked
from FTX's international exchange and $90 million had been hacked from
its U.S. exchange since it filed for bankruptcy on Nov. 11.
Indicted founder Sam Bankman-Fried later challenged aspects of the
company's report in a blog post.
Bankman-Fried, who has been accused of stealing billions of dollars from
FTX customers to pay debts incurred by his crypto-focused hedge fund,
Alameda Research, pushed back against FTX's calculations late Tuesday,
saying that the company's lawyers at Sullivan & Cromwell had presented
an "extremely misleading" picture of the company's finances.
Bankman-Fried said FTX has more than enough money to repay U.S.
customers, whom he says are owed between $181 million and $497 million
based on his "best guess." Bankman-Fried has not had access to FTX
records since stepping down as CEO in November.
A spokesperson for Sullivan and Cromwell declined to comment. Attorneys
at the firm said in a recent court filing that they have rebuffed
Bankman-Fried's efforts to stay involved in the company's bankruptcy
proceedings.
Bankman-Fried has pleaded not guilty to fraud charges, and he is
scheduled to face trial in October.
FTX did not provide an estimate of the amount owed to FTX's U.S. or
international customers, and it did not immediately respond to questions
about Bankman-Fried's blog post.
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The logo of FTX is seen at the entrance
of the FTX Arena in Miami, Florida, U.S., November 12, 2022.
REUTERS/Marco Bello
FTX provided some additional details about its recovery efforts on
Tuesday, saying it had recovered $1.7 billion in cash, $3.5 billion
in liquid cryptocurrency and $300 million in liquid securities.
"We are making progress in our efforts to maximize recoveries, and
it has taken a Herculean investigative effort from our team to
uncover this preliminary information," Ray said in a statement.
The crypto assets recovered to date include $685 million in Solana,
$529 million in FTX's proprietary FTT token and $268 million in
bitcoin, based on crypto prices on Nov. 11, 2022. Solana, which was
lauded by Bankman-Fried, lost most of its value in 2022.
During FTX's initial investigation into hacks of its system, it
uncovered a November asset seizure by the Securities Commission of
the Bahamas, which led to a dispute between FTX's U.S.-based
bankruptcy team and Bahamian regulators.
The two sides settled their differences in January, and Ray said on
Tuesday that the Bahamian government was holding $426 million for
creditors.
Bahamas Prime Minister Philip Davis referenced the dispute during a
Tuesday event at the Atlantic Council in Washington, saying Ray's
team had "come around" and accepted that the Bahamian asset seizure
"was appropriate and perhaps has saved the day for many of the
investors in FTX."
(Reporting by Dietrich Knauth in New York; Juby Babu in Bengaluru;
and Jasper Ward in Washington; Editing by Noeleen Walder, Amy
Stevens, Matthew Lewis and Gerry Doyle)
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