HomeCryptoFTX: still problems two months after the collapse

FTX: still problems two months after the collapse

Despite the fact that it has now been almost two months since the crypto exchange collapsed, the problems for FTX do not seem to want to end. 

With the filing for bankruptcy management, the company’s administration has shifted to trustee John J. Ray III, who is trying to cash in as much of the company’s assets as possible in order to give something back to creditors, including former customers. 

The opposition of the US trustee

This process may come to a halt because of an objection filed by a US trustee. 

According to a report by Reuters, the US trustee Andrew Vara has requested an independent investigation before the sales begin. 

According to Vara, the sales should not be permitted until a full and independent investigation of all persons and entities involved in this bankruptcy has been conducted. 

Vara most likely refers to those companies in the FTX group that once sold may no longer be under investigation by the authorities. His goal appears to be to prevent important information from being lost through the sales for possible future lawsuits against the administrators, functionaries, and employees of the group companies. 

The sales

Instead, the bankruptcy trustee has already planned to sell FTX’s units in Japan and Europe, along with the derivatives exchange LedgerX and the securities clearing platform Embed. The goal would be to sell right away to maximize proceeds, and to take advantage of the still convenient time to be able to sell with ease. 

A total of 134 companies would be involved in this procedure. 

They had planned to kick off the court auctions in February with the sale of Embed, followed by three more auctions in March. 

More than 110 interested parties had also already proposed for the purchases, so much so that FTX appears to have already entered into 26 confidentiality agreements with counterparties.

It is now unclear whether indeed the auctions will be postponed in order to have an independent investigation conducted, or whether Vara’s claims will be set aside. 

In addition to Embed and LedgerX, possible buyers are especially fond of the Japanese version of FTX, which is also already ready to reactivate withdrawals, and FTX’s European licenses. 


Among the various companies in the group, the one that had to file for bankruptcy is FTX Trading, that is, the one that operated the international crypto exchange. 

In fact, not only was the Japanese crypto exchange separate and operated by another group company, but also the one for the US market. 

At first, it was believed that FTX US, like FTX Japan, was not bankrupt, but it was later discovered that only FTX Japan seemed to have all the funds to be able to reopen withdrawals. 

What created the biggest problems was the group’s trading and investment company, Alameda Research, along with the fact that administrators were using exchange customers’ funds for corporate expenses. 

The huge financial hole created by Alameda Research, and the one in the accounts of users of the international version of the exchange, forced the former administrators to declare bankruptcy and file for Chapter 11.

Now all group companies are in the hands of the bankruptcy trustee, even those that did not have holes in their balance sheets. The goal seems to be to sell off the best assets, since there are buyers willing to buy them to put them back in business, so as to cash in to cover the holes. 

While it is possible that clients of FTX Japan may sooner or later receive back some of the funds they had deposited, it appears much more difficult for this to happen to clients of the international version. On the other hand, it is not yet crystal clear what situation the FTX US coffers are really in, but for now it does not appear that the curator agrees with the reopening of withdrawals. 

The crazy expenses

FTX had a habit of squandering millions of dollars on wasteful spending, allegedly drawing funds from customer deposits. 

According to Business Insider in just nine months he allegedly spent nearly $40 million on hotels, food and travel, including $15.4 million on luxury hotels and accommodations in the Bahamas. 

He even chartered private planes to fly Amazon packages to the Bahamas from Miami, according to the Financial Times, because deliveries to Nassau were not guaranteed.

What’s more, co-founder and CEO Sam Bankman-Fried also had a habit of giving away millions of dollars to candidates in US elections, so much so that according to the Wall Street Journal, the bankruptcy trustee is trying to ask for these contributions back.

Indeed, in agreement with the bankruptcy court it has initiated the first actions to recover the funds, totaling $73 million paid out in the last 18 months for the mid-term elections. 40 million was donated by SBF to Democratic and liberal candidates, while 23 million was donated to Republican and conservative candidates by top manager Ryan Salame. 

However, the bankruptcy trustee also put his eye on the charitable donations, that is, part of the $160 million SBF had announced it had donated to 110 non-profit organizations. 

They may not be able to recover much, but these figures clearly give an idea of how SBF and the other top managers of the FTX group were used to squander their customers’ money.

Marco Cavicchioli
Marco Cavicchioli
Born in 1975, Marco has been the first to talk about Bitcoin on YouTube in Italy. He founded ilBitcoin.news and the Facebook group" Bitcoin Italia (open and without scam) ".