The new managers at bankrupt crypto exchange FTX, led by restructuring officer John J. Ray III, have recovered approximately $7 billion in liquid assets with the recovery process still ongoing, according to a second investigative report from the management on Monday.
FTX Owe Customers $8.7 Billion
Per the report, FTX owed customers approximately $8.7 billion worth of assets when it filed for bankruptcy last November. The statement added that $6.4 billion of that total is denominated in either fiat currency or stablecoins that had been misused.
In its investigative report, the new management made some revelations concerning FTX’s operations under the leadership of founder and former CEO Sam Bankman-Fried (SBF). The team stated that the former management knowingly misused customer funds and engaged in deceptive practices such as executing false documents and circumventing detection by moving the FTX Group across multiple jurisdictions.
Ex-Management Lied About the Nature of Alameda’s Bank Account
The team stated that the former management provided false information about the nature of Alameda Research’s bank account, which was used to process customer funds.
“The image that the FTX Group sought to portray as the customer-focused leader of the digital age was a mirage. From the inception of the FTX.com exchange, the FTX Group commingled customer deposits and corporate funds, and misused them with abandon at the direction and by the design of previous senior executives,” John Ray said in a statement.
According to the investigative report, these deceptive practices made tracing FTX’s transactions and funding difficult. The statement added that the company’s former senior executives, including Caroline Ellison, the former CEO of Alameda, knew of the exchange’s more than $8 billion shortfall as early as August 2022 but did not say anything about it.
“They did not disclose the shortfall, but at that time, for the first time, they created a sham customer account on FTX.com to reflect the hidden fiat currency liability. To minimize the risk of scrutiny, the FTX Senior Executives and Ellison referred to this sham account only as ‘our Korean friend’s account,” the report stated.
