The company tasked with freezing the assets of failed cryptocurrency exchange FTX says it has managed to recover and secure $740 million in assets so far, a fraction of the potential billions of dollars that are likely to come out of the coffers of the company are missing.
The numbers were released Wednesday in FTX court filings, which cryptocurrency custodian BitGo ordered hours after FTX filed for bankruptcy on Nov. 11.
The biggest concern for many FTX customers is that they will never see their money again. FTX failed because its founder and former CEO Sam Bankman-Fried and his deputies used client funds to place bets in Alameda Research, the trading firm closely associated with FTX. Bankman-Fried was reportedly seeking more than $8 billion from new investors to repair the company’s balance sheet.
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Bankman-Fried “proved that there is no such thing as a ‘safe’ conflict of interest,” BitGo CEO Mike Belshe said in an email.
The figure of $740 million is from November 16th. BitGo estimates that the amount of recovered and secured assets has likely increased to over $1 billion since that date.
The assets recovered by BitGo are now locked in South Dakota in what is known as “cold storage,” meaning they are cryptocurrencies stored on hard drives that are not connected to the internet. BitGo offers what are known as “qualified custodian” services under South Dakota law. It’s basically the crypto equivalent of the financial trustee, offering segregated accounts and other security services to lock down digital assets.
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Several crypto ventures have failed this year as bitcoin and other digital currencies have plummeted in value. FTX failed when it experienced the crypto equivalent of a bank run, and early research has found that FTX employees commingled assets held for clients with assets they were investing.
“Trade, financing and custody have to be different,” Belshe said.
The recovered assets include not only Bitcoin and Ethereum, but also a collection of smaller cryptocurrencies that vary in popularity and value, such as B. the Shiba Inu coin.
California-based BitGo has a long history in asset recovery and asset protection. The company was hired to secure assets after the cryptocurrency exchange Mt. Gox failed in 2014.
FTX pays Bitgo an advance of $5 million and $100,000 per month for its services.
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