FTX has disclosed for the first time a shortfall of customer funds on its U.S. and international platforms, in a meeting with debtors on Tuesday.
The crypto platform also said it was subject to a hack two days after filing bankruptcy in November, which led to $415 million to be stolen.
The hacker stole $90 million from the U.S. exchange equating to around half of its assets, around $323 million — or 20% — from FTX’s international platform and $2 million from Alameda Research, its affiliated hedge fund.
FTX said that a small group of people at the company were able to take crypto assets off the exchange without any record-keeping.
“Based on current estimates of the amount of digital assets associated with the FTX.com and FTX U.S. exchanges…there is a substantial shortfall of digital assets at both exchanges,” it said.
The company has recovered $5.5 billion of liquid assets, including $265 million of unrestricted cash in the U.S. business, which isn’t kept in custody for customers nor used as collateral, and $273 million of unrestricted cash at the international platform.
On Nov. 11, the day the former cryptocurrency exchange filed for Chapter 11 bankruptcy, FTX debtors confirmed the shortfall of funds, identifying just $1.6 billion of crypto assets on FTX.com and $181 million on the U.S. platform.
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“It has taken a herculean investigative effort from our team to uncover this preliminary information,” said FTX Chief Executive John J. Ray III, who took over after Sam Bankman-Fried stepped down upon the bankruptcy filing.
“We ask our stakeholders to understand that this information is still preliminary and subject to change. We will provide additional information as soon as we are able to do so.”
FTX executives said that they intend to sell the real estate the company owns in the Bahamas -– valued at around $253 million -– to help plug the shortfall.
They also identified several crypto ventures in companies such as Genesis Digital Assets and Sequoia, amounting to a $4.6 billion book value that could be sold. Debtors warned, though, that the investments’ “recoverable value is likely to be materially lower than [the] acquisition value.”
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