Cryptocurrency Twitter prematurely rejoiced at the possibility that the statements of an FTX lawyer at its bankruptcy hearing meant that the company had recovered nearly all of its funds and was close to restarting. Neither is true.
FTX shared at the hearing that it has recovered a total of $7.3 billion in cash and liquid crypto assets. This includes $2 billion in cash, and $4.3 billion in ‘liquid’ cryptocurrencies. To be clear, ‘liquid’ in this context means tokens with a market capitalization of $15 million with $1 million in daily volume over a month. Currently a market cap of $15 million would place a coin at approximately the 700th rank on CoinMarketCap, suggesting liquidating some of these assets may be difficult.
FTX is currently assessing the viability of restarting the exchange, as part of its goal of maximizing recovery for creditors, but specifically warned that this path would take significant capital either from selling assets or finding outside funding. The lawyer also warned that the existing app “was a facade.” FTX intends to finish this assessment of whether or not relaunching the exchange is viable during Q2 of 2023.
Currently, the FTX debtors are targeting a Channel 11 Target Plan filing date next quarter, but don’t expect the plan to be confirmed until Q2 of 2024.
The FTX debtors have previously described an exchange practically devoid of internal controls, where the decision making authority rested with chief Sam Bankman-Fried (SBF).
SBF has been charged with twelve felony counts related to the FTX fraud, along with civil cases from both the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), and has plead not guilty. Several of his co-conspirators including Caroline Ellison and Gary Wang have plead guilty to charges related to the fraud.
Update 2023-04-14 17:50: Updated volume description to be considered liquid to state that the minimum requirement is $1 million in daily volume over a month, originally we stated the minimum was $1m in monthly volume. We regret the error.