FTX US discovers another $90 million is missing

As the bankruptcy and restructuring saga of FTX and its affiliates continues to unfold, more cases of assets transferred from the exchange are coming to light.

Closer to half a billion

The US Department of Justice has already begun investigating the $400 million hack that drained assets from FTX’s property. Whether the hack was carried out by bad actors who cashed in on the stock market’s chaotic demise or by an inside job will ultimately be decided by the court.

Nevertheless, the news shared today during a meeting with FTX’s Official Committee of Unsecured Creditors (UCC) brings the total assets disappeared due to post-bankruptcy hacks to just $10 million, just under half a billion.

That number represents a significant fraction of the $5.5 billion in cash and cash equivalents reported identified from the debtors so far.

Half of identified US assets stolen

Unfortunately, the numbers above refer to assets held by FTX Group as a whole. As for the US entity of the failed exchange, only $181 million in cash and cash equivalents was reportedly identified. $88 million has already been placed in cold storage under the control of FTX obligors, with an additional $3 million in assets pending placement in cold storage under the control of obligors.

The remaining $90 million appears to have gone up in flames.

According to John J. Ray III, FTX’s new CEO, who was brought in to oversee the restructuring process because of his experience of Enron-like bankruptcies, the information provided during the call is preliminary and required “Herculean efforts” to uncover it.

“We are making important progress in our efforts to maximize recovery and it has taken a Herculean investigative effort by our team to uncover this preliminary information. We ask our stakeholders to understand that this information is preliminary and subject to change. We will provide more information as soon as we are able.”

The interim CEO has already berated FTX for a near-unprecedented lack of corporate oversight and due diligence. Given the random nature of the Company’s accounting records, Mr. Ray’s assessment of the effort required to identify these assets is most likely accurate.

Mr. Ray also assured creditors that he and his team brought in to clean up the mess at FTX will do everything in their power to get as many assets back into the hands of FTX creditors as possible.

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