FTX Confirms That $8.9B In Funds Are Still Missing

By Kevin • March 4, 2023 10:52 am • Comments

It seems that the crypto market is still facing some of the after effects that have resulted from the FTX collapse that happened four months ago.

The company recently reported that there was still around $8.9 billion in customer funds that were still missing as a result of fraud.

As a result, it appears unlikely that customers will be able to recover their assets any time soon as FTX will have to continue to find ways to recover as much liquidity as possible.

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This is also assuming that the amount recovered is the full amount and anything less would mean that customer funds have been lost forever.

A lot of the creditors that were affected were also Fortune 500 companies which means that this may also affect the overall traditional financial markets instead of just retail customers.

Watcher.guru reports:

This is the first time the exchange has revealed a number pertaining to the fund deficiency. The exchange has reportedly pinned down around $2.7 billion in customer assets, relative to $11.6 billion of the balance outstanding on customer accounts.

The estimated value of FTX’s assets and liabilities is based on asset prices in November 2022, when the firm filed for bankruptcy.

Alameda Research had borrowed around $9.3 billion from customer accounts before bankruptcy. Thus, the current $8.9 billion hole can be attributed to Alameda Research. FTX did not clarify if the funds were borrowed with or without customer consent.

According to a financial update filed, FTX’s sister company only had around $475 million in cash in its accounts as of Jan. 31.

The collapse of FTX has been used as an excuse for many regulatory agencies to start enforcing crypto regulations more aggressively.

However, the downside for investors and speculators is that the guidelines for the industry are still unclear for the most part and is up to interpretation for agencies like the SEC.

As a result, many firms are hesitant about doing business within the US as there is always the potential that a crypto firm will suddenly be targeted by the SEC.

So far, FTX has only unfroze funds for FTX Japan which is only a small portion of customer funds and it is unclear when other regions will follow.

This will serve as an example for many to prioritize self-custody of funds in the future and may lead to the increasing popularity of decentralized exchanges in the future.

Gizmodo concludes:

Last month, FTX Japan finally unfroze its customer funds, letting a few of its customers access their (now-likely depreciated) funds. It remains unclear when, or even if, other FTX customers around the world will ever gain access to their accounts again.

The company said in its presentation it will keep updating customers about goings-on, though it also claimed “the information should not be relied upon for any purpose including, but not limited to, estimating recoveries in the FTX Debtors’ Chapter 11 cases.”

Federal prosecutors originally charged Bankman-Fried with eight counts of fraud and conspiracy, but they recently upped that to 12 with additional allegations of making hundreds of illegal political donations. The failed FTX founder has pleaded not guilty. His trial date is set for Oct. 2.

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