Fallen FTX Exchange Recovers over $7 Billion Thanks to Surging BTC

STO News

The
once-collapsed FTX cryptocurrency exchange has recovered $7.3 billion in liquid
digital assets and cash. Since January, this figure has increased by $800
million, according to a statement by the company’s lawyer, Andy Dietderich who
testified on Wednesday before the American Bankruptcy Court.

FTX Benefits from Rising
Crypto Prices

Dietderich
admitted that the value of recovered assets would have been $1 billion lower if
not for the strong growth of cryptocurrencies since the beginning of the year.
For example, Bitcoin (BTC), the largest and oldest digital asset, has gained
over 80% in the past three months.

Part of the
recovered funds came from a deal with Modulo Capital to raise $400 million in
cash that was in the hedge fund’s accounts. The funds were sent by
FTX-related companies in 2022.

After users withdrew over $6 billion from the platform in just three days in November, and Binance pulled out of a rescue deal proposal, the once-massive digital asset exchange declared bankruptcy. However, a few months later, it is reconsidering its future and the future of its Founder, Sam Bankman-Fried (SBF), who has not
yet been convicted in the alleged misappropriation of client funds.

SBF was
replaced as the CEO by John Ray, who claims that improper fund transfers,
coupled with poorly managed accounting books, were the main reasons for the
collapse of the once-thriving crypto machine.

“The
situation has stabilized, and the dumpster fire is out,” Dietderich said
in the US Bankruptcy Court in Delaware.

Will FTX Cryptocurrency
Exchange Rise Again?

Although
FTX was one of the most high-profile collapses in the cryptocurrency market and
caused a massive crisis in the industry, leading to a slump in the value of
major tokens and the bankruptcy of other companies, those associated with the
platform want it to reopen its doors to customers.

FTX is negotiating
with shareholders about restart options, and the exchange’s lawyer expects a
final decision by the end of the current quarter. However, the platform would
need to raise significant capital to cover its obligations to all retail
clients whose funds have been frozen. So far, only Japanese traders have been
granted the ability to withdraw deposits due to strong regulations in that
market. In just one day, users from Japan withdrew $50 million from the $138
million in cash that the Japanese subsidiary held when it ceased operations.

Dietderich
believes securing external financing or selling some of the platform’s assets
may be necessary to relaunch the exchange.

CySEC Extends FTX Europe’s
License Suspension, Talks About Withdrawals

CySEC
recently revealed that FTX EU LTD has begun the process for customers to
request final account balances and withdraw fiat funds from segregated
accounts. The market regulator anticipates a smooth and swift withdrawal
process.

In response
to FTX EU’s announcement regarding the initiation of procedures to return
segregated funds to investors under Cyprus law, CySEC’s Chair, Dr George
Theocharides expressed satisfaction that regulatory efforts have culminated in
a positive outcome, following months of investor unease and apprehension.

Additionally, CySEC confirmed an extension of the suspension of FTX EU’s authorization until
the end of September 2023. The Cyprus Investment Firm (CIF) license was
initially suspended on November 11, 2022, in the wake of FTX.com, Alameda
Research, and over 130 affiliates filing for bankruptcy. The suspension was
then prolonged until the end of March 2023, and now it has been extended even
further.

This article was written by Damian Chmiel at www.financemagnates.com.

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