The headcount declined by nearly 40% during the same period.
An interim financial update revealed that the FTX Group of companies undergoing bankruptcy proceedings held $1.43 billion in cash at the end of last year.
The court filing viewed by Bloomberg showed a higher cash balance on 31st December 2022 than a $1.24 billion tally as of 20th November.
Its now-defunct sister trading company, Alameda Research, recorded a cash balance of $876.6 million versus $401 million in November.
Bankman-Fried pleads not guilty
The crypto sector experienced significant challenges in the first half of 2022, with the prices of major assets like bitcoin (BTC) and ether (ETH) experiencing a 50%+ drop in value. The situation was further exacerbated by the collapse of the Terra ecosystem in the second quarter, which had a ripple effect on the industry. As a result, major industry players such as Three Arrows Capital, Celsius Network, and Voyager Digital filed for bankruptcy later in the year.
In a document submitted on Dec. 23, FTX requests assistance from the court in its fight to retain control of Robinhood shares. The company’s new CEO, John J. Ray III, filed a motion at the US bankruptcy court for the District of Delaware.
The global investment banking firm – Jefferies Group – reportedly determined FTX creditors could retrieve as much as 40% of their lost money.
In an interview for The Block, Joseph Femenia – Global Head of Distressed Debt Trading at Jefferies – said there’s light in the tunnel for FTX creditors who could recover between 20% and 40% of their assets.
The Kanto Local Finance Bureau will supposedly halt FTX Japan’s activities on March 9, 2023.
The Japanese authorities reportedly extended the business suspension order to FTX Japan until March 9, 2023.
Initially, the company had to cease all services on December 9.
Binance CEO Changpeng Zhao (CZ) and ex-FTX boss Sam Bankman-Fried (SBF) traded barbs over Twitter on Friday as each contested the true nature of their private business dealings.
During the exchange, Bankman-Fried asked CZ why he would “lie” about their situation, given he had already “won,” post bankruptcy.
:format(jpg)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/AIZ2EYO45JDGZESMFFE3H22YY4.jpg)
CZ began with reference to Kevin O’Leary’s latest comments on FTX’s fallout.
In his interview with CNBC, the Shark Tank star suggested that FTX spent much of its cash attempting to buy back its equity from Binance due to the latter’s “opque” ownership. He also refrained from accusing Bankman-Fried of fraud, as he has done multiple times since FTX’s bankrupcy.
O’Leary was paid $15 million to promote FTX’s brand in August 2021, and was an early investor in the company. CZ believes this has something to do with why he would seemingly run defense for FTX and SBF – even after the exchange’s collapse.
“Unlike Kevin O’Leary, we continue to do due diligence even after we make an investment,” said CZ. “As an early investor in FTX, we became increasingly uncomfortable with Alameda/SBF and initiated the exit process more than 1.5 years ago.”
According to CZ, Binance began to leave behind its equity position in July 2021 due to worries about SBF and Alameda’s practices. This, per the Binance CEO, set off Bankman-Fried on multiple “unhinged” tirades against Binance team members, wherein the former billionaire threatened to “go to extraordinary lengths” to punish Binance. “We still have those text messages,” said CZ.
This apparently sparked FTX to launch a mass investment campaign among “friends in high places,” including media, politicans, and celebrities like Kevin O’Leary to steer public opinion in favor of FTX, and against its opponents.
In early November, CZ implied that FTX was lobbying against other player in the crypto industry in congress. Later that month, congressman Tom Emmer said he’d received reports of SBF conspiring with the SEC to forge a regulatory monopoly for FTX in the exchange business.
“You don’t have to be a genius to know something don’t smell right at FTX,” continued CZ. “They were 1/10th our size, yet outspent us 100/1 on marketing & “partnerships”, fancy parties in the Bahamas, trips across the globe, and mansions for all of their senior staff.”
CZ boasted in June that his company was especially frugal during the 2021 crypto bull market, and had developed a large “war chest” relative to other more profligate competitors.
SBF’s Story
Unlike CZ, Bankman-Fried alleged that his company was the one that initiated talks about buying out Binance’s stake in FTX, echoing his word to Kevin O’Leary on the matter.
He also claimed that Binance never had the right to pull out as an investor unless FTX voluntarily opted for a buyout.
“But again, none of this is necessary. You won. Why are you lying about this now?” he asked.
CZ contested SBF’s framing of their dealings as a “competition” or “fight,” asserting that “no one won,” as an outcome.
Former FTX CEO Sam Bankman-Fried may have apologized dozen times for the failure of his firm, but there’s no stopping the contagion.
Another casualty came in the name of a crypto trading platform – Aurus Global – which is currently facing a “short-term liquidity issue” due to FTX insolvency.
The algorithmic trading and market-making firm reportedly missed a principal repayment on a 2,400 Wrapped Ether (wETH) decentralized finance loan worth around $3 million. This was revealed by ‘M11 Credit,’ which happens to be an institutional credit underwriter.
Its tweet regarding the same read,
“Auros is experiencing a short-term liquidity issue as a result of the FTX insolvency. This does not mean the loan is in default. We are working with Auros, who have acted promptly and responsibly. Our top priority is to limit the risk for our lenders. We will continue our liaison with the Auros team in regard to all their open loans from our pools.”
M11 Credit further emphasized that the missed payment does not equate to the loan being in default. Rather, the missed deadline has prompted a grace period of 5 days “as per the smart contracts.” Auros is currently working with the credit underwriter to publish a joint statement detailing further information to lenders.
FTX filed for bankruptcy on November 11th after suffering a liquidity crisis and failing to honor withdrawals. As a result, many companies in the market bore the brunt of the impact and were directly hit by the storm.
Digital Currency Group (DCG) subsidiary and institutional trading firm Genesis has $175 million in locked funds within the firm’s trading account on FTX. The firm’s creditors hired restructuring lawyers and are exploring ways to avoid filing for bankruptcy.
US-based lender BlockFi filed for bankruptcy earlier this week in a New Jersey court, simultaneously slapping Bankman-Fried with a lawsuit in the same court.
Meanwhile, a hedge fund managed by a subsidiary of German crypto platform Immutable Insight also revealed that it is exposed to FTX’s fallout and is owed $1.6 million.
FTX owes its 50 largest unsecured creditors a total of $3.1 billion, according to a filing at a Delaware court. The identity of the claimants remained unknown, but the filings show that two of its largest customers are owed over $200 million, while all 50 of them are owed $21 million each or more.
On-chain sleuth ZackXBT has tracked down some of the mixed Bitcoin funds stolen by the mysterious FTX hacker this month.
The analyst found that $4.1 million worth of Bitcoin (255 BTC) has ended up on OKX, a cryptocurrency exchange.
As explained on Twitter, the hacker initially deposited the stolen funds to CoinMixer – an anonymous Bitcoin mixing service designed to make on-chain Bitcoin transfers harder to track.
The first CoinMixer deposit was made on November 20th after the attacker used Ren Bridge to move assets from Ethereum’s blockchain to Bitcoin’s. As of Tuesday, there is $7 million in ETH remaining on the address.
After examining the deposits, ZackXBT said that the hacker had likely transferred those funds to OKX, after withdrawing from the mixer.
“So far we’ve accounted for at least $4.1m (255 BTC) sent to OKX,” he said.
The analyst further elaborated that 50% of funds were “peeled off” post CoinMixer withdrawal, as another 50% were sent to OKX.
The FTX hacker drained over $400 million in funds from the exchange just hours after it declared bankruptcy on November 11th. It has since commenced numerous swaps and bridge transfers obscuring the trail of the funds.
At one point, the exploiter’s address became the 35th largest holder of ETH, though the attacker’s identity remains unknown.
Bahamian regulators claimed earlier this month that they were the ones behind the hack, having directed the transfer of funds to its own wallet for “safekeeping.” However, some suspect that this could be an inside job.
Another former cryptocurrency giant has filed for Chapter 11 bankruptcy protection in the United States.
Thus, BlockFi has followed the example of companies like Celsius and Three Arrows Capital.
The cryptocurrency lender’s troubles began as the bear market intensified earlier this year, especially after the Terra collapse.
There seemed to be a lifeboat thrown by FTX a few months down the road as the exchange provided a $400 million loan to BlockFi and had the option to purchase the company for up to $240 later on.
However, the once SBF-led giant crashed spectacularly earlier this month, which led to a new wave of problems.
Some reports emerged claiming that BlockFi was exploring filing for bankruptcy, but company reps refuted them at first.
Yet, the crypto lender has indeed filed for Chapter 11 bankruptcy protection in a New Jersey court, as reported by CNBC.
The filing reads that BlockFi had over 100,000 creditors and its liabilities were somewhere between $1 billion and $10 billion.
“We do have significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX.US.” – a company spokesman had previously said.
This year has already seen its fair share of bankruptcy filings in the crypto industry. Celsius was among the first, followed by 3AC, Voyager, and more.
Michael Burry is bullish on gold as the crypto industry continues to suffer from the FTX crash.
Michael Burry, the fund manager and investor who became popular from the “The Big Short” movie, believes gold will shine as investors seek safety from crypto risks due to the catastrophic collapse of Sam Bankman-Fried’s FTX.
Burry is notoriously famous for shorting the U.S. housing market and profiting from the 2008 financial crisis. He also netted millions from investing in GameStop in 2019 before the Reddit frenzy and meme stock season in January 2021.
The fund manager shared his thoughts on gold in a tweet that has now been deleted. According to Burry, Gold’s time will come as the crypto market continues to suffer from the contagion caused by FTX’s downfall.
“Long thought that the time for gold would be when crypto scandals merge into contagion,” the fund manager said.
Recall that crypto exchange FTX came crashing down last week after allegedly mismanaging users’ funds for years. The company soon ran into liquidity issues and was unable to process withdrawals. FTX and more than 130 affiliated companies have filed for voluntary Chapter 11 and 15 bankruptcy protection, with estimated liabilities between $11 billion and $16 billion.
FTX’s downfall sent another wave of liquidity crunch across the crypto industry as numerous entities, including Genesis, BlockFi, Galaxy Digital, and Canada’s Ontario Teachers Pension Plan (OTPP), had financial exposure to the exchange before it went bankrupt.
Meanwhile, gold rallied 8% this month after consecutive losses in the last seven months. According to analysts, investors are bullish on the precious metal due to cooling inflation and crypto risks, among other reasons.
Burry’s latest comments come more than a year after he warned about the “mother of all crashes” in crypto. During the bull run last year, the fund manager cautioned that all hype and speculation do is draw in retail investors before the mother of all crashes.
“When crypto falls from trillions, or meme stocks fall from tens of billions, #MainStreet losses will approach the size of countries. History ain’t changed,” he said.
The investor further noted that leverage is crypto’s biggest problem, and those who do not know how much leverage there is in the crypto market have more to learn about crypto.
Mr. Wonderful would still hire Bankman-Fried on his team if the ex-CEO was relegated to a strict crypto trading role.
The Canadian businessman and Shark Tank star Kevin O’Leary still believes Sam Bankman Fried’s future businesses could be worth investing in, despite losing money on FTX.
O’Leary recently outlined the extent of his exposure to the exchange while arguing that there’s a “silver lining” in the company’s collapse.
In an interview on Tuesday, Mr. Wonderful admitted that FTX was one of his “bad investments” but remains safe due to his diversification of assets.
Nevertheless, the investor took a “huge hit.” He said he was a shareholder of FTX and FTX US and held multiple accounts with the exchange that are now frozen.
“I’ve talked to many other institutional investors that use the platform – they also have zero balances,” he added. “Everybody’s talking to their accountants and lawyers, and auditors, and compliance departments about this. It’s an extraordinary situation.”
O’Leary was previously a spokesperson for FTX. Last month, he suggested that the exchange was the last place he’d expect to “get in trouble.” He’d also predicted in June that crypto would likely see its bottom once a “big player” was wiped out – which he now believes was FTX.
As another silver lining, O’Leary said the exchange’s blowup is pressuring regulators to provide clearer industry guidelines going forwards. For example, key pieces of crypto legislation – such as the Digital Commodity Act – are getting new focus after remaining stagnant in congress.
In the meantime, the investor plans to remove all of his assets from unregulated exchanges and move them to a regulated Canadian exchange called Bitbuy. The company is regulated by the Ontario Securities Commission (OSC) and is legally barred from co-mingling user funds in the way FTX is suspected of doing.
O’Leary explained that cold storage custody of assets isn’t an option for firms mandated to limit their crypto exposure to a certain percentage of their net worth. As such, assets must be available to trade at all times, so he can sell certain assets to remain within their “diversified mandate.”
“You are going to see billions of dollars leave unregulated and exchanges looking for somewhere in the world where they can be put safely. That, right now, is Canada.”
Unlike the United States, Canada was the first country in the world to approve a Bitcoin Spot ETF, which accurately tracks the spot price of Bitcoin. It has since approved Bitcoin, and Ethereum mixed ETFs as well.
Even after his losses, Mr. Wonderful maintains that FTX’s former CEO, Sam Bankman-Fried, doesn’t have an “evil bone in his body.”
“You can love him or hate him given what’s happened, but I think we can all admit he was one of the most brilliant traders in the crypto universe,” he said.
When asked if he would back Bankman-Fried in a hypothetical new crypto venture, O’Leary said he would as long as the former billionaire had only “trading control” of assets, unlike “operational control.” Overall he maintained that the crypto tycoon is an “unusual one percent person” in understanding how digital assets work.
Aside from losses resulting from the FTX hack, the bankrupt exchange is apparently unable to account for $1 billion to $2 billion of client funds, say people familiar with the matter, and its balance sheet shows liabilities of $8,859 million against assets of just $899 million.
In addition, $10 billion was transferred to sister company Alameda Research and, perhaps most damagingly from a legal perspective, FTX insiders created a “back door” to its accounting systems, according to Reuters reports.
A back door to bypass oversight requirements opens the FTX leadership to charges that they were trying to shield their nefarious activities from the rest of the groups employees.
These latest explosive findings follow an admission by the exchange that "unauthorized transactions" had taken place.
So far it is estimated that the $600 million may have been drained from wallets in what was either a hack or nefarious behaviour by insiders.
The sketchy balance sheet shown above includes a number of large “less liquid” and illiquid entries, such as $2.1 billion worth of Serum (SRM) tokens, which when marked to market will be worth much less than the book entry indicates.
There are other strange entries, such as "Anthropic" $500 million; "TWTR" $43.2 million and "TRUMPLOSE" $7.3 million.
TWTR is of course the ticker for Twitter, but it is sitting in the illiquid part of the ledger, which is strange as even though Twitter is now a private company, as a shareholder when it was public, if an FTX entity was a shareholder, FTX should have received $54.20 a share for its stock holding.
As the FTX disaster unfolds, crypto prices remain weak. Bitcoin is off 2% today at $16,565.
But as reports emerge about how the close knit executive team lived and worked together – some of them in off and on relationships – the multiplying fears about the way FTX was run are mounting.
A nexus of former Jane Street traders is at the centre of the running of the company out of a Bahamas mansion, where many of the executive live, according to a story on Fortune citing its own and Coindesk reporting.
Damningly, one person in the know said of FTX: “The whole operation was run by a gang of kids in the Bahamas".
There are nine people who are though to live together in the luxury dwelling alongside FTX former CEO Sam Bankman-Fried.
Among them are Alameda Research CEO Caroline Ellison, FTX co-founder and chief technology officer Gary Wang and FTX Director of Engineering Nishad Singh. According to Fortune the other six are all FTX employees.
“Gary, Nishad and Sam control the code, the exchange’s matching engine and funds,” the first person familiar with the matter said. “If they moved them around or input their own numbers, I’m not sure who would notice.”
Another person said to be familiar with how the company operated claimed: “They’ll do anything for each other.”
Also, Wang, Nishad and Bankman-Fried were the sole board members of the philanthropic arm of the sprawling FTX empire, the FTX Foundation.
Bankman-Fried is a graduate of MIT, as is Gary Wang.
The FTX and Alameda offices are situated next to each other in a compound that they share with various crypto incubator projects.
These internecine relationships made FTX, allegedly, a nest of conflicting interests and oversight nightmares.
Rumors are now circulating on social media that Sam Bankman-Fried and other members of the top team were on a private jet flight from the Bahamas to Argentina at 01:45 EST on Saturday morning.
The Gulfstream private jet registration is LVKEB and is thought to be an FTX property.
https://globe.adsbexchange.com/?icao=e0b142
Yesterday, the Gulfstream's journey was the most tracked flight in the world.
However, SBF has since communicated with Reuters via text and he is reported to have replied “Nope” when asked if he was in Argentina, apparently confirming that he was still in the Bahamas.
Cryptonews has also reached to SBF, on Telegram, but by press time had not received a reply.
But on the official FTX Telegram a pinned message from an admin named Jack says they have no idea where SBF is – in other words they are not corroborating the statement the former CEO made to Reuters in which he claims to still be on the Caribbean island of the Bahamas.
Speaking at a conference in Indonesia on Saturday, Binance CEO Changpeng Zhao (CZ) thinks that the FTX collapse has severely damaged the crypto space, setting it back years.
Critics of CZ might argue that he should have thought of that before he triggered what was in effect a bank run on FTX.
“I think basically we’ve been set back a few years now. Regulators rightfully will scrutinise this industry much, much harder, which is probably a good thing to be honest.” said CZ
Solana, which has, up until now, had a close relationship with FTX, is seeing selling pressure in its SOL token continue to increase, down another 7% today to $13.98.
The extreme bearishness has spread to wrapped BTC on the Solana chain, which is down 76% in an ominous sign for those involved in the coin ecosystem.
FTX victims are starting to take proactive action by preparing for a law suit.
Group called FTX CLASS ACTION LAWSUIT (CHAT) with 50-plus members already exists and is growing fast, as some worry that the official telegram could be closed and therefore want to organise independently of the filled exchanges’ outlets.
Group founder AJ told Cryptonews that they haven't hired a lawyer yet but "should be done with that in a couple of days".
The Group has set up a Google Form entitled “Users affected by the bankruptcy of FTX”, to collect information from creditors.
In a further illustration of the weak processes that are in place on some exchanges, it has just emerged that crypto.com accidentally sent 320k ETH in customer funds to Gate.io, which gate.io promptly returned – as shown in gate.io proof of reserves.
And there are also doubts being raised in some quarters about the veracity of some of the proof of reserves (PORs) reports that are being published by centralised exchanges. Mario Nawfal, CEO or IBCGroup.io is not impressed by the PORs from Gate and Huobi
In other news, Binance has passed FTT deposits after noticing “suspicious movement of a large amount of FTT”.
The FXT Token (FTT) price continues its seemingly unstoppable descent to $0:
Providing some advice for crypto market participants, CZ tweeted in the past hour or so “@TrustWallet your keys, your coins”, in a reference to the Binance self-custody wallet and the mantra for crypto safety.
Those self-custody lessons seem to have been overlooked by many in recent times, as exchanges appeared to have become safer places to trade and to be trusted with custody of assets.
The Trust Wallet Token (TWT) is up 63% today at $2.02:
One such area is in presale tokens, which can offer a haven at times like this – providing you pick the right ones.
Two presale tokens catch the eye today – Dash 2 Trade (D2T) and RobotEra (TORA).
Dash 2 Trade is building an analytics and signals trading platform with a state-of-the-art dashboard, featuring, unique presale scoring system, social sentiment analysis and social trading, auto-trading and backtesting.
In a vote of confidence in the project, LBank and, most recently, BitMart has both signed deals to list the token after its presale ends.
RobotEra could be the next hot metaverse gaming project and is akin to The Sandbox. Checkout the video for more info on this 30x opportunity. RobotEra is backed by Kucoin exchange and Polygon Studios.
Vitalik Buterin has shared some thoughts on SBF and the way the community has reacted to the whole fiasco so far.
The co-founder of Ethereum has shared some thoughts on the FTX fallout and, more precisely, on the reaction toward the former CEO – Sam Bankman-Fried.
SBF the public figure deserves what it’s getting and it’s even healthy to have a good dunking session to reaffirm important community values.
Sam the human being deserves love, and I hope he has friends and family that can give it to him.
CZ believes that although the FTX fiasco will have cascading effects, the market will eventually heal itself.
Changpeng Zhao (CZ), CEO of the world’s largest cryptocurrency exchange Binance, has expressed his belief in the ability of the crypto market to heal itself once the full impact of FTX’s implosion is felt.
Speaking at a conference in Indonesia, CZ said that more companies would be affected by FTX’s downfall, considering how big the crypto exchange was.
“With FTX going down, we will see cascading effects. Especially for those close to the FTX ecosystem, they will be negatively affected,” he said, adding that in the end, the “market will heal itself.”
The Binance CEO likened the current crypto winter to the 2008 global market crash, the most severe financial crisis since the Great Depression.
CZ noted that the global economic crisis is “probably an accurate analogy” to the recent happenings, adding that the full impact of FTX’s collapse is yet to be felt. He said the downfall would have cascading effects and that more companies would fail in the coming weeks.
Zhao’s comments follow the sudden collapse of now-ex-billionaire Sam Bankman-Fried’s crypto empire FTX.com and Alameda Research. FTX and over 130 of its affiliates have already filed for bankruptcy, with Bankman-Fried stepping down as CEO.
The series of ugly events, which quickly unfolded this week, sent the crypto market crashing down, with Bitcoin (BTC) dropping to new lows below $17,000.
Recall that Bankman-Fried was popularly known as crypto’s white knight due to the massive bailouts he rendered to struggling crypto firms affected by the market crash in May.
The list of firms he helped includes crypto-lender BlockFi. The former FTX CEO signed a $250 million revolving credit facility deal with BlockFi to allow the lender to continue processing users’ withdrawals. The crypto lending firm has now halted withdrawals following the downfall of FTX.
Bankman-Fried also won an auction to buy bankrupt crypto broker Voyager’s assets for $1.4 billion.
During the conference, CZ said FTX “obviously… won’t have the money” for the Voyager transaction, adding that “a few other projects are going to be in similar situations. I think it will take a couple weeks for most of them to come out.”
The world's largest crypto briefly rose above $70,000 Friday, but immediately tumbled about 5% to below $67,000 It's deja vu all ove...
:format(webp)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/W3R54NYJCNDPZJYRR56ZGFFBWY.jpg)
