FTX Debtors’ Total Assets Updated to $6.1 Billion After Discovering Significant Shortfall in Digital Asset Wallets
FTX Trading Ltd. has announced a significant shortfall in the fiat bank accounts and digital asset wallets associated with its FTX.com and FTX.US exchanges. The company, along with its affiliated debtors, filed for Chapter 11 bankruptcy protection in November 2022 in Delaware. FTX Trading Ltd. is now sharing more information with stakeholders and the public about the extent of the shortfall.
According to the latest FTX Debtor Disclosure figures, Alameda Research, a digital asset trading firm, net borrowed $9.3 billion from FTX wallets and accounts. FTX Trading Ltd.’s current total assets of $2.2 billion are only $694 million in relatively liquid assets.
The FTX Debtors recently met with the Official Committee of Unsecured Creditors (UCC) in their Chapter 11 cases and shared a presentation that will be filed on the docket in the Chapter 11 cases. The presentation describes for the first time publicly the magnitude of the shortfalls discovered in the fiat bank accounts and digital asset wallets associated with the FTX.com and FTX.US exchanges.
John J. Ray III, the CEO and Chief Restructuring Officer of the FTX Debtors, said, “It has taken a huge effort to get this far. 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.”
The presentation and information can be found on the docket of the Chapter 11 cases and posted on the quick links section of the FTX Debtors Kroll site.
The presentation shows a massive shortfall at FTX.com, with only $694 million of total assets out of $2.2 billion considered “Category A Assets,” which are the most liquid currencies, such as fiat, stablecoin, BTC or ETH. Other assets at FTX.com include $385 million of customer receivables and substantial claims against Alameda Research LLC and related parties. The presentation shows a $9.3 billion net borrowing by Alameda Research LLC from the FTX.com wallets and accounts.
FTX.US has a shortfall as well, with only $191 million of total assets located in the wallets of the accounts associated with the exchange. In addition, the presentation shows $28 million of customer receivables and $155 million of related party receivables, compared to $335 million of customer claims and $283 million of related party claims payable. The presentation shows a $107 million net payable by FTX.US to Alameda Research LLC.
The presentation also provides information concerning daily deposits and withdrawals from both exchanges during the 90 days prior to the commencement of the Chapter 11 cases.
The FTX Debtors believe the transparency provided through these presentations is important for stakeholders and the public, and to ensure that all stakeholders have roughly contemporaneous access to the preliminary information as it develops. However, the information in the presentation is preliminary and subject to material change. The analysis is further complicated by the incomplete nature of the books and records and financial information maintained by pre-petition management.
The FTX Debtor Disclosure figures do not attempt to adjust for commingling of assets or insider access to assets, which may be the subject of future, material adjustments. Actual recoveries will depend on many facts and factors, including the extent of other assets and liabilities of FTX Trading Ltd. and West Realm Shires Services Inc., the amount and nature of customer and related party claims, the priority of such claims, and the legal and regulatory requirements applicable to the distributions to be made to the creditors of the debtors.
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