Landis Rath & Cobb attorney Adam Landis testified on behalf of FTX at a hearing on Wednesday that the exchange had recovered over $5 billion in assets. This figure did not include an additional $425 million in cryptocurrency held by the Securities Commission of the Bahamas.
The attorney stated that an unknown amount of money needs to be paid out to customers.
After its new management indicated on December 20 that it could only locate a little more than $1 billion in FTX claims, the business made the statement that significantly increased the total FTX claims it owns. It still needs to be discovered how much FTX owes its creditors. Initially, the company’s management indicated a debt between $1 billion and $10 billion in bankruptcy filings by marking the appropriate box.
Landis claims that Sam Bankman-Fried directed his subordinate, Gary Wang, to borrow money from FTX clients on behalf of Alameda secretly. The former CEO, he said, also established a $65 billion credit line between the exchange and the trading division.
He further said this had created a shortfall in value that prevented them from paying back creditors and consumers.
It currently needs to be determined how much of a gap will exist. It will be contingent on the scope of the claims and the success of FTX recovery efforts. Nonetheless, the exchange is getting closer to finishing the tasks required to estimate recoveries for a reorganisation plan.
In December, CFO Mary Cilia predicted that the business would be able to finish the task by April. In a hearing on Wednesday, however, Judge John Dorsey of the Delaware Bankruptcy Court set a deadline of March 15. Financial expert Kevin Cofsky estimated that there might be as many as 9 million creditors, a number that Sullivan & Cromwell partner Brian Glueckstein echoed.
An agreement for collaboration between the Securities Commission of the Bahamas and Landis’s office was just revealed. In reference to it, Landis called it an essential first step to align incentives and maximise joint recovery.
Landis argues that if customers get their $1, it doesn’t matter who collected it. A team was formed with the official committee of creditors and the Bahamas JPL to investigate potential avenues for selling or reorganising the worldwide platform.