FTX Bankrupt case is still running in court and the founders struggling to get resolve this issue. The latest updates are mentioned in this article.
In their first bankruptcy hearing, the counsel for the defunct cryptocurrency exchange described continuous issues like hackers and substantial missing assets while claiming that Sam Bankman-Fried, the company’s former CEO, ran FTX as a “personal fiefdom.”
The largest-profile crypto meltdown to date occurred when rival exchange Binance abandoned a rescue plan while traders withdrew $6 billion from FTX in three days. Millions of creditors are expected to have damages of billions of dollars as a result of the collapse.
The company currently plans to sell off healthy business segments but has experienced cyberattacks and “significant” assets that have gone missing, according to an attorney for FTX who testified at a bankruptcy hearing on Tuesday.
FTX announced on Saturday that it has started a strategic evaluation of its worldwide assets and is getting ready to sell or reorganize some businesses.
According to FTX, a procedure to reorganize or sell its assets would be undertaken after it received interest from prospective bidders on Tuesday.
Around 1,500 people watched the hearing live online on YouTube and Zoom, which took place at the U.S. Bankruptcy Court in Wilmington, Delaware.
The corporation was allegedly managed by Bankman-Fried as a “personal fiefdom,” with $300 million going toward real estate, including mansions and getaway sites for key staff.
Since declaring bankruptcy, FTX has been headed by new CEO John Ray, who has accused Bankman-Fried of collaborating with Bahamian regulators to “undermine” the American bankruptcy case and transfer assets abroad.
An email requesting comment from Bankman-Fried did not receive a prompt response.
According to official property records, Bankman-FTX, Fried’s parents, and senior executives of the defunct cryptocurrency exchange purchased at least 19 homes in the Bahamas during the past two years, according to a previous story by Reuters. These purchases totaled about $121 million.
The sale of FTX by Binance in July 2021, according to attorneys, needs to be the subject of an investigation. In 2019, Binance acquired a stake in FTX.
Separately, according to a declaration made late on Monday by Ed Mosley of Alvarez & Marsal, a consultant that advises FTX, FTX’s cash balance as of Sunday was “significantly higher” than initially believed. It was $1.24 billion.
It includes about $400 million at Alameda Research accounts, the cryptocurrency trading business controlled by Bankman-Fried, and $172 million at FTX’s Japan division.
According to Reuters, Bankman-Fried utilized at least $1 billion of the $10 billion in customer deposits to prop up his trading operation.
Read More; FTX Company terminates 3 of its upper executives.
FTX Shutdown Discussion:
FTX executives argued during the hearing that client names should remain a secret because sharing them could disrupt the cryptocurrency market and expose users to hacking.
FTX also claimed that its client list is a significant asset and that revealing it would harm upcoming sales attempts or enable competitors to steal its user base.
Until a subsequent court session, the judge ruled that those names could not be revealed.
The wind-down of FTX’s Bahamas subsidiary, FTX Digital Markets, was being managed by court-appointed liquidators, according to the FTX lawyers.
In order to prevent the prospect of contradictory decisions from two distinct U.S. bankruptcy judges, the two sides first agreed to coordinate their U.S.-based insolvency proceedings before Judge John Dorsey.
But it was clear from both parties’ signals that they continue to disagree on how best to organize the recovery and preservation of assets held by different FTX affiliates.
Requests for comment were not immediately answered by Bankman-Fried, FTX, or the Bahamas liquidators.
Related Story; FTX has $1BN Client funds missing
Fears of Contagion:
The demise of FTX has shaken the crypto community, sending bitcoin to its lowest point in about two years and igniting concerns of contagion among other businesses already suffering from the collapse of the crypto market this year.
Days after the collapse of FTX prompted it to halt customer redemptions, major U.S.
cryptocurrency lender Genesis revealed on Monday that it was attempting to avoid bankruptcy.
In an email to Reuters, a Genesis representative stated, “Our intention is to settle the current situation consensually without the necessity for any bankruptcy filing.” The company added that it is still in contact with its creditors.
According to a Bloomberg News story that cited sources, Genesis was having trouble finding new funding for its loan division.
According to sources cited by The Wall Street Journal, Genesis approached Binance looking for funding, but the cryptocurrency exchange opted against it due to concerns about a conflict of interest.
According to the WSJ, Genesis also requested cash assistance from Apollo Global Management, a private equity firm.
A Reuters request for comment on the WSJ claim was not immediately answered by Apollo, and Binance declined to comment.
Gemini, a cryptocurrency exchange that collaborates with Genesis to offer a crypto loan product, tweeted on Monday that it was still working with Genesis to make it possible for its users to withdraw money via the latter’s revenue-generating “Earn” program.
Following Genesis’ suspension of withdrawals, Gemini stated on its blog last week that there had been no impact on its other goods or services.
Some cryptocurrency players have turned to decentralized exchanges, or “DEXs,” where investors trade peer-to-peer on the blockchain since the collapse of FTX.
According to data from market watcher Defi Llama, overall daily trading volumes on DEXs increased to their greatest level since May on Nov. 10 as FTX plummeted, but have subsequently reduced gains.