FTX CEO Discovers $1 Billion In Cash In Custody

Key Point:

• FTX executives said they identified more than $1 billion in assets held in hundreds of accounts.
• This amount is being attempted to counter.
• FTX is working to identify all of FTX’s international crypto assets and move them to cold wallets.

FTX CEOs discovered large amounts of the company’s cash was being stored in hundreds of offshore accounts. This amount is currently being recovered. The bankruptcy process of the collapsed crypto company was fraught with obstacles due to its poor record and complicated financial situation.

According to Coindesk, the company’s new management, who took over when FTX founder Sam Bankman-Fried stepped down on November 11, said in a due process hearing on Tuesday that it has determined assets worth more than $1 billion. The company has placed approximately $720 million in cash assets, which the exchange has yet to consolidate, at US financial institutions authorized by the US Department of Justice to hold the funds. Nearly another $500 million was held in US institutions.

“We are reaching out to all of those banks and changing the signatories on the accounts so that we can get access to the accounts and move the cash as much as we can to authorized depository institutions,”

FTX’s new chief financial officer, Mary Cilia said during part of bankruptcy proceedings.

Mary Cilia, FTX’s new chief financial officer, said they are contacting the banks and changing the signers on the accounts, so that they can access the account and transfer as much cash as possible to authorized depository institutions.

Of that, another $485 million was deposited in authorized U.S. depository institutions. Meanwhile, about $130 million in cash has been frozen in Japan. Additionally, FTX has identified a $6 million deposit for operating expenses such as salaries.

Of the $423 million deposited into unauthorized entities in the United States, the majority was held by a broker Cilia declined to identify.

Steve Coverick, senior director of financial advisors at FTX, Alvarez & Marsal, said at the hearing that they are working to define FTX’s international crypto assets and move them to cold wallets through custodial providers like Bitgo.

The Chapter 11 bankruptcy hearings were intended to close the exchange, but were complicated by perceived mismanagement and poor recordkeeping under Sam Bankman-Fried’s reign.

Cilia said the company has yet to file the declaration of assets or financial position required by US bankruptcy law and now estimates it will be able to do so by April 2023.

The company is still trying to determine how many employees worldwide and how much was withdrawn resulting in bankruptcy.

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