NEW YORK/LONDON, Nov 22 (Reuters) -Striken crypto exchange FTX has suffered cyberattacks and “substantial” assets are missing, attorneys for the firm said on Tuesday, after a court filing said the firm has a total cash balance of $1.24 billion.
NEW YORK/LONDON, Nov 22 (Reuters).
The collapse of FTX, once one of the world’s largest cryptocurrency exchanges, has left an estimated 1 million creditors facing losses totaling billions of dollars.
Its cash balance as of Sunday was “substantially higher” than previously thought, Monday’s filing by Edgar Mosley of Alvarez & Marshal, a consultancy firm advising FTX, said.
New managers at cryptocurrency exchange FTX have found the company and its affiliates have $1.24 billion in cash — more than what debtors had previously identified — as the beleaguered firm heads to U.S. bankruptcy court.
According to published reports Tuesday (Nov. 22), court filings show that advisory firm Alvarez & Marsal — assigned to unearth FTX’s assets — was able to locate “substantially higher cash balances” than expected.
In court filings this weekend, Alvarez & Marsal reportedly said it had found $564 million spread across multiple bank accounts tied to FTX and its dozens of affiliates.
The company, which said recently it owes $1.45 billion to its top 10 creditors alone, is scheduled to appear in bankruptcy court Tuesday.
FTX’s road to bankruptcy began earlier this month with reports that its sister trading fund, Alameda Research, was significantly exposed to FTX’s FTT token, which underpinned its apparent solvency, and not an independent asset such as a fiat currency or a third-party cryptocurrency.
In response to the news, rival crypto platform Binance began to unload a nearly $2 billion equity stake in FTX held primarily in FTT token, leading to a “run” on FTX, with the exchange’s customers withdrawing $6 billion, crashing the price of FTT tokens by 72%.
Binance offered to acquire FTX, but withdrew from the deal as more news about FTX’s troubles came to light. By Nov. 11, FTX founder Sam Bankman-Fried had resigned as CEO, leaving the company and its affiliates seeking bankruptcy protection.
The collapse has left a number of people in the crypto industry and the larger financial world to call for more regulation of the field.
On Tuesday, PYMNTS spoke about the collapse and calls for regulation with Saule T. Omarova, a Cornell University professor of law who specializes in financial regulation. She was also President Joe Biden’s pick for U.S. Comptroller of the Currency, before asking for her nomination to be withdrawn.
Omarova spoke to PYMNTS’ Karen Webster, saying that a lack of “common sense internal controls,” was among the most glaring failures at FTX.
“We should have seen something like this coming because of the incredible speed with which this market has grown and the lack of any legal or regulatory compliance culture in this new sector, run by a lot of interesting [sic] personalities who are not necessarily part of the financial establishment,” she said.
FTX heads to bankruptcy court Tuesday: What to expect
FTX’s new management will use a bankruptcy-court hearing Tuesday to bring the largest crypto failure in history into focus.
FTX is expected to make its first appearance in bankruptcy court today in an attempt to recount what led to the fallout of the company. High stakes for the crypto exchange with filings showing numerous creditors are due hefty sums here.
For more, let’s bring in Yahoo Finance’s Alexis Keenan. Alexis, what do we know from the legal proceedings that are about to commence here?
The CEO of the company John J. Ray, he said that the company might need until January to complete that picture, to tabulate the company’s assets and liabilities. The reasons cited there, last week, Ray had said that he was looking at a complete failure of corporate controls and also an absence of trustworthy financial information that existed at the company
Though, in a filing on Saturday, FTX identified 216 bank accounts that hold approximately $564 million. The company also identified its top 50 creditors. These were all customers of FTX. And they owned, the company said, a collective $3.1 billion.