FTX dumps crypto assets to raise cash and refund…

FTX is dumping crypto assets and storing cash while bankruptcy advisors search for a way to recover funds for clients whose accounts have been frozen since the platform collapsed in 2022.

The four largest subsidiaries of this cryptocurrency company, including FTX Trading Ltd. and Alameda Research LLC, The group's total cash has almost doubled to US$4.4 trillion at the end of 2023, compared to US$2.3 trillion at the end of October. According to the monthly Chapter 11 filings, the company's total cash is likely to be higher, including the rest of its subsidiaries.

A representative for FTX declined to comment.

FTX had raised $1.8 billion as of December 8 through the sale of some of the company's digital assets, the company said in a lawsuit last month. FTX also said it trades bitcoin derivatives to hedge exposure to the currency. To generate additional return on its digital holdings, it is exploring options to restart the exchange.

The increase in FTX's cash reserves coincided with the increase in the value of clients' accounts. Since FTX's collapse in November 2022, bankruptcy advisors have been tracking assets and making trades for clients with smaller accounts on the platform. The company has also filed major lawsuits against former partners of Sam Bankman-Fried and cryptocurrency companies such as Bybit Fintech Ltd. Which withdrew funds from FTX before the company filed for Chapter 11.

According to investment firm and bankruptcy claims brokerage Cherokee Acquisition, client claims worth more than $1 million were trading at about 73 cents on the dollar on Friday, compared with about 38 cents on the dollar in October. Actual negotiated rates depend on the value of a specific claim and other factorsaccording to Cherokee Acquisition.

However, FTX stated that it does not expect to fully refund customers' funds, and that FTX.com customers will suffer a greater percentage of losses. Dozens of FTX clients are challenging a company proposal that would fix the value of their digital assets as the company files for bankruptcy. Which means they will miss out on Bitcoin's year-long rally and other token rally.

Read more at bloomberg.com