John Ray, chief executive officer of FTX cryptocurrency derivatives exchange, arrives in bankruptcy court on Tuesday, November 22, 2022 in Wilmington, Delaware, US.
Eric Lee | Bloomberg | Getty Images
The news comes after federal prosecutors announced plans seize at least $500 million worth of assets linked to FTX as part of the ongoing prosecution of FTX co-founder Sam Bankman-Fried.
The recovery will be a welcome boon for FTX customers after the crypto exchange imploded in November. The new CEO of FTX, John J. Ray previously testified that at least $8 billion of client assets were unaccounted for in the “worst” case of corporate control he had ever seen.
FTX attorney Adam Landis told the court that the $5 billion figure does not include any illegal cryptocurrency assets. The company’s holdings are so large that selling them would have a significant impact on the market, reducing their value, he said.
The collapse of FTX was related, among other things, to a failure to correctly mark illiquid assets to market. FTX executives, including Bankman-Fried and Alameda Research CEO Caroline Ellison, borrowed against the value of FTT, the token issued by FTX. Almeida controlled the vast majority of circulating FTT coins, similar to the float of publicly traded companies, and could not liquidate his position at full book value.
Correction: This article has been updated to reflect that FTX attorney Adam Landis told the court the $5 billion figure Does not include any illiquid cryptocurrency assets.