FTX is selling off its cryptoassets and accumulating cash in an effort to find a solution for repaying customers whose accounts have been frozen since the platform’s collapse in 2022.
The company’s main affiliates, including FTX Trading Ltd. and Alameda Research LLC, significantly increased the group’s cash reserves to $4.4 billion by the end of 2023, up from $2.3 billion in late October, as reported in Chapter 11 monthly operating reports. FTX mentioned raising $1.8 billion by selling digital assets until December 8, engaging in Bitcoin derivative trades to hedge exposure, and exploring options to potentially restart the exchange.
While FTX’s cash position has grown, so has the value of customer accounts. Since the platform’s downfall in November 2022, bankruptcy advisers have been working to locate assets and strike deals to benefit customers with smaller accounts. FTX has also initiated lawsuits against former associates of Sam Bankman-Fried and other crypto firms like Bybit Fintech Ltd. that withdrew funds before the Chapter 11 filing.
The market value of customer claims exceeding $1 million has risen from around 38 cents on the dollar in October to approximately 73 cents on the dollar as of Friday, according to Cherokee Acquisition, an investment firm and bankruptcy claims broker. FTX, however, has expressed doubts about fully repaying customers, with users of FTX.com expected to bear a greater share of the losses. Some FTX customers are contesting a proposal that would peg the value of their digital assets at the time of the bankruptcy filing, potentially missing out on gains from the yearlong Bitcoin rally and the rebound of other tokens.
