July 22, 2024
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$740M in crypto assets recovered in FTX bankruptcy


The company tasked with locking down assets of the failed cryptocurrency exchange FTX Trading said it has recovered $740 million in assets so far, a fraction of the potential billions of dollars likely missing from FTX’s coffers.

Cryptocurrency custodial company BitGo disclosed the figure on Wednesday in court filings. FTX hired BitGo hours after the company declared bankruptcy earlier this month.

The biggest worry for many of FTX’s customers is if they’ll ever see the money they invested on the platform again. Experts told CBS MoneyWatch that customers will likely have to wait years to get their money back, while many may never recover the funds.

FTX failed after its founder and former CEO, Sam Bankman-Fried, and his lieutenants used customer assets to make bets in Bankman-Fried’s trading firm, Alameda Research. The $740 million figure is from Nov. 16, and since then additional assets have been steadily been recovered.

The crypto world has been shaken by FTX’s bankruptcy as it watched one of the largest exchanges crumble in about a week. The company and Bankman-Fried are being investigated in the U.S. and abroad for possible securities violations. Securities regulators in the Bahamas — where FTX is based — seized some of the company’s assets days after FTX filed for bankruptcy in the U.S.

Regulators in California and Texas said they are also probing FTX.

Problems facing FTX came to light earlier this month when Bankman-Fried told a group of investors the company needed about $8 billion to back up its users’ crypto assets. The company experienced crypto’s version of a bank run earlier this month when users withdrew about $5 billion in a single day amid rising concerns about FTX’s solvency.

Bankman-Fried tweeted Wednesday that he plans to speak at a New York Times event on November 30.

The assets recovered by BitGo are now locked in what is known as “cold storage” in South Dakota, which means the cryptocurrency is stored on hard drives not connected to the Internet. BitGo provides what is known as “qualified custodian” services under South Dakotan state law.

The assets recovered include not only Bitcoin and Ethereum, but also a collection of minor cryptocurrencies that vary in popularity, such as the Shiba Inu coin.

California-based BitGo has a history of recovering and securing assets. They were tasked with securing assets after the cryptocurrency exchange Mt. Gox failed in 2014. The company is also the custodian for the assets held by the El Salvadoran government.

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