Crypto

So far, US$740 million in crypto assets recovered in FTX bankruptcy

The firm responsible for locking up the assets of failing cryptocurrency exchange FTX says it has successfully recovered and secured $740 million in assets so far, a fraction of the billions of dollars potentially missing from the company’s vaults. society.

The numbers were leaked in court filings on Wednesday by FTX, which hired cryptocurrency custodian firm BitGo hours later. FTX has filed for bankruptcy the 11th of November.

The biggest worry for many FTX customers is that they will never see their money again. FTX failed because its founder and former CEO Sam Bankman-Fried and his lieutenants used client assets to place bets in FTX’s closely related trading company, Alameda Research. Bankman-Fried reportedly sought more than $8 billion from new investors to repair the company’s balance sheet.

Bankman-Fried “has proven that there is no such thing as a sure conflict of interest,” BitGo CEO Mike Belshe said in an email.

The $740 million figure is as of November 16. BitGo estimates that the amount of assets recovered and secured has likely exceeded $1 billion since that date.

Assets retrieved by BitGo are now locked in South Dakota in what is called “cold storage,” meaning they are cryptocurrencies stored on hard drives not connected to the internet. BitGo provides what is known as “qualified custodian” services under South Dakota Law. It is essentially the crypto equivalent of the financial trustee, offering segregated accounts and other security services to lock down digital assets.

Several crypto companies have failed this year, such as bitcoin and others digital currencies have lost value. FTX failed when it experienced the crypto equivalent of a bank run, and early investigations revealed that FTX employees were mixing assets held for clients with assets they were investing.

“Trade, finance and custody have to be different,” Belshe said.

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 the assets after the failure of the Mt. Gox cryptocurrency exchange in 2014. It is also the custodian of the assets held by the government of El Salvador under the experiment of this country of using bitcoin as legal tender.

FTX pays Bitgo a retainer of $5 million and $100,000 per month for its services.

This story was published from a news feed with no text edits. Only the title has been changed.

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