FTX managers recovered $7 billion in liquid assets from the exchange
FTX's new management has recovered $7 billion in liquid assets from the bankrupt crypto exchange
The former management of the crypto platform had used customer funds at its discretion since its inception, court documents allege
The FTX exchange was able to recover $7 billion in liquid assets, according to a report (1704) published June 26 on the law firm Kroll's website. The platform's new management said it had made "substantial progress" in recovering customer funds illegally spent by FTX founders and former managers.
FTX managers began recovering money from recipients of donations from former exchange chief Sam Bankman-Fried and his former colleagues back in late December 2022. The company said that if the previously transferred funds are not returned voluntarily, FTX representatives will go to court to demand the return of not only the money itself but also the interest on it, which will accrue from the date of filing the documents in court.
FTX restructuring manager John Ray also said in a report that the FTX group founders have used customer funds at their own discretion since the platform's inception.
"Since the inception of the FTX.com exchange, the FTX group has pooled customer deposits and corporate funds and used them unchecked at the direction and by the design of previous executives," Ray alleged.
The report describes new details of the schemes by which Sam Bankman-Fried and his colleagues diverted funds from the exchange. FTX created North Dimension, which was falsely described as a cryptocurrency trading firm with 2,000 counterparties and an average monthly trading volume of $10 million. In fact, it was a shell company that FTX used to accept money from customers and withdraw funds for the Bahamas exchange, the documents claim.
When an employee of the exchange discovered this and expressed concern that North Dimension accounts were being used to withdraw funds from FTX exchange customers, the company fired him, according to the report.
At the time of the bankruptcy filing in November 2022, the FTX.com exchange owed customers about $8.7 billion, the documents said. The receivers were able to recover most of those funds, including through claims for political and charitable donations.
In early June, the Metropolitan Museum agreed to return $550,000 in donations from the cryptocurrency exchange FTX in Spring 2022. A little earlier, the University of Toronto agreed to return nearly $500,000 it received from the cryptocurrency exchange.
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