FTX Identifies $5.5 Billion in Liquid Assets, Faces "Substantial Shortfall" in Customer Owed Funds

FTX Identifies $5.5 Billion in Liquid Assets, Faces “Substantial Shortfall” in Customer Owed Funds

Failed crypto exchange FTX said Tuesday that it has identified $5.5 billion in liquid assets and current estimates show that both the international and US-based exchanges face a “substantial shortfall” in what they owe customers.

Following the firm’s Chapter 11 bankruptcy filing in November, FTX announced on Jan. 17 that it had identified $1.7 billion in cash, $3.5 billion in crypto assets, and $0.3 billion in securities.

The debtors also stated that they had discovered approximately $1.6 billion in digital assets associated with FTX.com, including approximately $426 million held by the Securities Commission of the Bahamas and $181 million associated with FTX US.

We are making important progress in our efforts to maximize recoveries, and it has taken a Herculean investigative effort from our team to uncover this preliminary information, said FTX CEO John Ray.

We ask our stakeholders to understand that this information is still preliminary and subject to change. We will provide additional information as soon as we are able to do so.

Around $1.7 billion of the company’s assets are held in a “hot wallet,” or cryptocurrency wallet connected to the internet, making it less secure.

BitGo, a major cryptocurrency custody provider, has another $1.1 billion in more secure “cold storage,” while the Securities Commission of the Bahamas has $426 million, and FTX Japan has $140 million. Another $415 million was stolen just hours after the company declared bankruptcy.

According to the release, Alameda Research holds securities valued at $268 million, including $197 million in shares of the Grayscale Bitcoin Trust, $45 million in shares of the Grayscale Ethereum Trust, $21 million in the Bitwise 10 Crypto Index Fund, and $0.1 million in BlackRock equity. FTX’s portfolio of Bahamas real estate, valued at $253 million, comprises 36 properties.

FTX also confirmed that “there is a substantial shortfall of digital assets at both exchanges” based on current estimates of the number of digital assets associated with the FTX.com and FTX US exchanges as of the Petition Date.

We ask our stakeholders to understand that this information is still preliminary and subject to change. We will provide additional information as soon as we are able to do so, Ray added in the update.