Bankrupt FTX significantly increased its cash holdings to $4.4 billion by the end of 2023 as the collapsed crypto exchange has moved towards repaying customers and creditors. The cash holding almost doubled from $2.3 billion at the end of October, according to Chapter 11 monthly operating reports.
Selling Crypto for Cash
First reported by Bloomberg, the bankruptcy administrators of the crypto exchange sold its crypto assets to raise $1.8 billion last month. The figure only considers the four largest affiliates, including FTX Trading Ltd and Alameda Research LLC, meaning it could go higher if all the affiliates are considered.
The exchange additionally confirmed trading derivatives to hedge exposure on its digital asset holdings and earned extra yield.
FTX, one of the top global crypto exchanges at its peak, collapsed in November 2022 after the shady business practices of its Founder and former Chief Executive, Sam Bankman-Fried, surfaced. He has been convicted of seven counts of fraud, conspiracy, and money laundering and is now awaiting sentencing.
As the troubles of the crypto exchange surfaced, its customers flooded with withdrawal requests, which it failed to handle due to a liquidity crunch and collapse.
As the #FTX crypto is missing, the side effect of this (if rules in your favour) maybe each creditor being entitled to an in-kind distribution, but those with #BTC at #FTX may end up with nothing, whilst those with Shitcoins may get 100% if no shitcoins are missing.Be careful! https://t.co/9CkjjZ3g70— Simon Dixon (@SimonDixonTwitt) January 29, 2024
Repayment Plan Is on the Way
Last month, the management of the exchange submitted an amended reorganization plan for the distribution claims of the customers and creditors. However, that lacked details on how the claimants would receive the proceeds from the bankrupt exchange.
According to an earlier filing, the bankrupt exchange will repay billions of dollars to customers and creditors. There were also murmurs of reopening the FTX crypto exchange. However, no official plan around has been submitted.
Meanwhile, FTX's management received the court’s approval to sell four of its subsidiaries, which, according to them, operated independently from the tainted parent. It sold its crypto derivatives exchange subsidiary LedgerX to M7 Holdings, an affiliate of Miami International Holdings, for $50 million.
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