Bankrupt FTX Exchange Doubles Cash Reserves to $4.4 Billion by Selling Crypto Assets
Crypto News – The bankruptcy estate of cryptocurrency exchange FTX has successfully increased its cash reserves to $4.4 billion within a span of two months through the sale of a significant portion of its crypto assets. This strategic move is part of the exchange’s ongoing efforts to accumulate liquid assets in preparation for the repayment of its creditors.
As of December 2023, financial advisors overseeing the bankruptcy proceedings executed the sale of cryptocurrencies from FTX’s four largest affiliated entities. This action nearly doubled the estate’s cash reserves, as reported by Bloomberg on a Saturday, citing the Chapter 11 monthly operating reports. Notably, the estate’s cash holdings surged from $2.3 billion in October to the current $4.4 billion.
The four prominent entities involved in these transactions include FTX Trading, Alameda Research, West Realm Shires Inc, and Clifton Bay Investments. West Realm Shires Inc. serves as the holding company for FTX’s U.S.-based entity, FTX.US, while Clifton Bay Investments stands as one of the companies within FTX Ventures, the exchange’s venture capital arm. It is worth noting that Clifton Bay Investments is the sole affiliate, aside from FTX Ventures, that has prepared quarterly financial statements.
Since gaining clearance in September to liquidate its crypto holdings, the FTX bankruptcy estate has frequently transferred funds from wallets associated with FTX to other cryptocurrency exchanges. Additionally, the estate has unstaked substantial sums of cryptocurrency from various staking platforms.
Recent reports have suggested that the FTX estate alone may have been responsible for nearly $1 billion in outflows from the Grayscale Bitcoin Trust (GBTC) during the initial five days of its trading as an exchange-traded fund (ETF).
Around the same timeframe, Alameda Research decided to voluntarily withdraw a lawsuit against GBTC issuer Grayscale, which had alleged an “improper redemption ban” on shares of the fund. It’s important to note that this lawsuit was filed before GBTC underwent its transformation into an ETF.
While the FTX estate’s efforts to accumulate liquid assets are expected to significantly contribute to repaying creditors, some customers of the exchange have raised concerns about the valuation of their claims. Presently, the value of customer funds will be linked to the market value of their assets at the time FTX filed for Chapter 11 bankruptcy. Notably, the price of Bitcoin has surged by 150% since that date, currently trading at approximately $42,200.