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$740M in crypto assets recovered in FTX bankruptcy so far

$740M in crypto assets recovered in FTX bankruptcy so far24-11-2022 11:07
HarveyH55Profile picture★★★★★

NEW YORK (AP) — The company tasked with locking down the assets of the failed cryptocurrency exchange FTX says it has managed to recover and secure $740 million in assets so far, a fraction of the potentially billions of dollars likely missing from the company's coffers.

The numbers were disclosed on Wednesday in court filings by FTX, which hired the cryptocurrency custodial company BitGo hours after FTX filed for bankruptcy on Nov. 11.

The biggest worry for many of FTX's customers is they'll never see their money again. FTX failed because its founder and former CEO Sam Bankman-Fried and his lieutenants used customer assets to make bets in FTX's closely related trading firm, Alameda Research. Bankman-Fried was reportedly looking for upwards of $8 billion from new investors to repair the company's balance sheet.

Bankman-Fried "proved that there is no such thing as a 'safe' conflict of interest," BitGo CEO Mike Belshe said in an email.

The $740 million figure is from Nov. 16. BitGo estimates that the amount of recovered and secured assets has likely risen above $1 billion since that date.

The assets recovered by BitGo are now locked in South Dakota in what is known as "cold storage," which means they're cryptocurrencies stored on hard drives not connected to the internet. BitGo provides what is known as "qualified custodian" services under South Dakota law. It's basically the crypto equivalent of financial fiduciary, offering segregated accounts and other security services to lock down digital assets.

Several crypto companies have failed this year a s bitcoin and other digital currencies have collapsed in value. FTX failed when it experienced the crypto equivalent of a bank run, and early investigations have found that FTX employees intermingled assets held for customers with assets they were investing.

"Trading, financing, and custody need to be different," Belshe said.

The assets recovered include not only bitcoin and ethereum, but also a collection of minor cryptocurrencies that vary in popularity and value, such as the shiba inu coin.

California-based BitGo has a history of recovering and securing assets. The company was tasked with securing assets after the cryptocurrency exchange Mt. Gox failed in 2014. It is also the custodian for the assets held by the government of El Salvador as part of that country's experiment in using bitcoin as legal tender.

FTX is paying Bitgo a $5 million retainer and $100,000 a month for its services.

Seems like FTX was the only crypto owner, the account owners only investors, and never actually owned any of the coins they thought. Crypto is actually only a bank account number. The 'bank' uses your investment, as it's own, not to mention steal your investment with transaction fees, and devalued exchange rates. The scam is in making investors believe they are actual owners of something more than account numbers, with no content. What the are really buying is shares in a fund, which is really just a cash pool of all the products the exchange offers. The exchange uses that pool anyway they want or need. Long as there is no made rush to cash out by investors, they have enough cash on hand to keep the appearance of doing good business. Long as they don't get greedy, and steal too much, or take huge risks, they shouldn't fail. But, with any business doing well, with a huge pile of cash to play with, why not take bigger risks, for bigger payouts.
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