FTX, the crypto firm embroiled in fraud allegations, has been increasing its cash reserves by selling some of its crypto assets, according to Bloomberg. The company filed for Chapter 11 bankruptcy in November 2022 and is looking for ways to repay its customers and potentially resume its exchange operations.
The company’s four largest affiliates, including FTX Trading Ltd. and Alameda Research LLC, reported a combined cash balance of $4.4 billion at the end of 2023, up from $2.3 billion in late October, according to monthly operating reports. The total cash amount may be higher as not all affiliates have filed their reports.
FTX said in a court document last month that it raised $1.8 billion by selling some of its digital assets through Dec. 8. It also said it was conducting Bitcoin derivative trades to hedge its exposure to the cryptocurrency and generate additional income from its digital holdings. Moreover, it said it was exploring options to restart the exchange, which has been frozen since the bankruptcy filing.
FTX Faces Lawsuits And Customer Claims
FTX’s bankruptcy filing came after several regulators and investors accused the company of fraud, market manipulation, and money laundering. The company’s founder and CEO, Sam Bankman-Fried, denied the allegations and said he cooperated with the authorities.
Since the bankruptcy filing, FTX’s advisers have been working to recover assets and strike deals with customers with smaller accounts on the platform. The company has also sued former associates of Bankman-Fried and other crypto firms, such as Bybit Fintech Ltd., that withdrew funds from FTX before the bankruptcy.
However, FTX has warned that it does not expect to fully repay its customers, who have filed claims worth billions of dollars. The company has proposed to value the customers’ digital assets at the time of the bankruptcy filing, meaning they would miss out on the gains from the Bitcoin rally and other tokens in the past year. This proposal has been challenged by dozens of customers, who argue that it is unfair and violates the bankruptcy code.
The value of customer claims has risen along with FTX’s cash reserves. According to Cherokee Acquisition, an investment firm and bankruptcy claims broker, customer claims worth more than $1 million traded at around 73 cents on the dollar as of Friday, up from 38 cents in October. The firm said that the actual trading prices may vary depending on the specific claim and other factors.
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