FTX’s Financial Resilience: Recovering $2.1 Billion Through Cryptocurrency Sales Amidst Bankruptcy

According to Bloomberg’s analysis, FTX, the cryptocurrency exchange platform that has been in bankruptcy since November 2022, managed to recover $2.1 billion between October and December 2023 through the sale of its cryptocurrencies.

FTX Selling Cryptocurrencies to Repay Customers

Based on Bloomberg’s assessment of FTX’s Chapter 11 operating reports, the bankrupt exchange platform recovered $2.1 billion between October and December 2023. In preparation for repaying its clients, FTX and its subsidiaries, including FTX Trading Ltd and Alameda Research, nearly doubled their dollar reserves, increasing from $2.3 billion to $4.4 billion in the last two months of the past year.

On December 8, 2023, FTX disclosed in a court filing that it had recovered $1.8 billion by selling some of its cryptocurrencies. According to Bloomberg, the platform continued these sales, recovering an additional $300 million in December 2023.

FTX’s Solutions for Repaying Creditors

Although the exchange platform’s operations are suspended, FTX continues to incur legal fees of $1.3 million per day. Simultaneously, its liquidators are working to find the best solutions to repay its creditors.

Since the Securities and Exchange Commission (SEC) approved Bitcoin Spot ETFs, FTX reportedly sold all its shares of GBTC, Grayscale’s Bitcoin ETF, thereby recovering nearly $1 billion through the transaction.

This sale adds to the $5 billion in cash withdrawn from GBTC since the approval of ETFs, a dynamic that significantly contributed to the decline in the price of Bitcoin (BTC).

In November 2023, FTX filed a lawsuit against Bybit, another cryptocurrency exchange platform. Bybit had withdrawn the equivalent of $953 million in cryptocurrencies before FTX filed for Chapter 11 bankruptcy, making the bankruptcy official. This case is still ongoing.

Despite plans to relaunch its services, FTX remains relatively pessimistic, not expecting to fully repay its clients. One of the solutions considered by the liquidators is to reimburse clients at the value of their holdings at the time of the bankruptcy.

This method would allow FTX to repay all its clients, given the significant increase in the value of most cryptocurrencies since the platform’s bankruptcy. However, this solution doesn’t satisfy all clients, whose funds have been locked for over a year, representing a significant financial loss for them.


Disclaimer: Not Investment Advice

it’s crucial to understand that the information provided here is not to be construed as investment advice. The crypto market is dynamic and highly speculative, and decisions should be made based on thorough personal research and consideration of individual risk tolerance. Always consult with financial professionals and conduct your own due diligence before making any investment decisions. The intention of this exploration is to present insights and trends, not to provide specific investment recommendations.

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