A bankruptcy attorney for cryptocurrency firm FTX said the company has already recovered “over $5 billion” in cash and securities as disgraced founder Sam Bankman-Fried faces years in prison.
Attorneys have been working to recover funds from the massive company to repay creditors after its dramatic collapse in November. The following month, Bankman-Fried, 30, was arrested in the Bahamas and has since been extradited to the United States.
“We have located over $5 billion of cash, liquid cryptocurrency, and liquid investment securities measured at petition date value. [It] just does not ascribe any value to holdings of dozens of illiquid cryptocurrency tokens, where our holdings are so large relative to the total supply that our positions cannot be sold without substantially affecting the market for the token,” Sullivan & Cromwell attorney Adam Landis said during a Wednesday court hearing.
It is still not clear how much money FTX owes its creditors, although initial bankruptcy filings indicated that the number is between $1 billion and $10 billion.
CRYPTO ENDS YEAR IN A DEEP, DARK ‘WINTER’
Bankman-Fried is accused of funneling funds from FTX customers into an associated hedge fund, Alameda Research. Those assets were then allegedly used for personal loans to Bankman-Fried and others and as a bit of a slush fund for political donations, parties, planes, and more.
Despite projecting an image of frugality, wearing shorts and wrinkled T-shirts during TV interviews, court documents have revealed just how much money Bankman-Fried spent in the months leading up to his fall from grace.
In just nine months last year, the firm’s Bahamian affiliate, FTX Digital Markets, spent $15.4 million on luxury hotels and lodging, according to court documents. Additionally, FTX allegedly spent nearly $7 million on food and entertainment, Business Insider reported last week.
Bankman-Fried was based out of a luxe penthouse located on New Providence, the most populous island in the Bahamas and home to its capital, Nassau. The penthouse was part of the Albany luxury resort community, which is nestled on 600 acres and features several pieces of residential real estate, a hotel, restaurants, and an 18-hole champion golf course.
One of Albany’s founders told Fortune in 2021 that lodging at the resort, which is a frequent haunt for A-list celebrities, can fetch up to $60,000 per night.
Bankman-Fried is facing eight charges from the Southern District of New York and allegations from the Securities and Exchange Commission and the Commodity Future Trading Commission. After his arrest, he was released on $250 million bail and forced to live with his parents. He pleaded not guilty to the charges earlier this month but faces years in prison if convicted.
FTX’s collapse caused other dominoes tethered in the cryptocurrency firm to fall. Crypto lender BlockFi announced late last month that it had filed for bankruptcy. BlockFi’s struggles were intertwined with those of FTX as the company provided BlockFi with a $400 million credit line and the option to buy the company.
Not only has FTX’s implosion hurt businesses tied to the firm, but it has also had a macro effect on the cryptocurrency market at large.
The price of bitcoin has been hovering around $17,000 for the past month, a dramatic decline from its peak of $69,000 just over a year ago. In the week or so after news broke about FTX, bitcoin fell by more than 20%, adding to the downward pressure cryptocurrencies faced all last year.
In addition to the finance world, the FTX collapse has also touched the world of politics.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
Bankman-Fried and others associated with FTX donated millions of dollars to campaigns, political action committees, and candidates in the lead-up to last year’s midterm elections. In fact, the FTX founder was one of the top financiers for Democrats and has claimed to be the GOP’s third-biggest donor, although used “dark money” to finance Republicans.
Many recipients, facing a PR nightmare, rushed to donate the funds to charities, although the bankruptcy trustee may come knocking and ask for that money back, sources have told the Washington Examiner. If those funds were already donated away, the recipient of the contributions may be forced to cut a check or face a suit by the trustee to wrest it back.
