John Ray, the new chief executive officer and chief restructuring officer of FTX, has revealed steps being taken by the beleaguered crypto exchange to secure assets in the near term amid conducting bankruptcy proceedings.
According to a tweet by the exchange’s general counsel, Ryne Miller, the CEO stated that FTX.com and FTX.us had initiated processes to move as many of their digital assets as can be identified to a new cold wallet custodian in line with their obligations as Chapter 11 Debtors-in-Possession.
The statement confirms the widely reported hack of FTX by attackers that have stolen an estimated $600 million from the platform and turned the FTX mobile app into malware. Ray said that FTX is working with relevant law enforcement and regulators to respond to the attack.
“As widely reported, unauthorized access to certain assets has occurred. An active fact review and mitigation exercise was initiated immediately in response. We have been in contact with, and are coordinating with law enforcement and relevant regulators,” Ray, the restructuring specialist who handled the liquidation of Enron Corp – one of the largest bankruptcies in history, said.
The situation at FTX continues to grow more troubling as, according to a Reuters scoop, between $1 billion to $2 billion of users’ assets are not accounted for in the Alameda-related $10 billion FTX loss.
The report also alleges that FTX’s former CEO and co-founder, Sam Bankman-Fried (also SBF), built an accounting backdoor in the exchange’s booking system that left other executives in the dark of FTX’s transactions with Alameda.
Meanwhile, as many as 130 companies in FTX’s portfolio are also part of the Chapter 11 bankruptcy proceedings. Hundreds more in which the exchange made investments, and several venture capital firms that invested in its funding rounds are facing the possibility of failing or recording significant losses.
FTX implosion bringing positive change to crypto?
The crypto market has seen an over $201 billion reduction in capitalisation due to the FTX collapse. This results from investors pulling their funds from the industry due to fears that other crypto firms may follow after FTX.
Several crypto exchanges have launched campaigns to assuage these fears by embracing the concept of proof-of-reserve (PoR). The industry has seen exchanges, including Binance, Crypto.com, Kraken, Bitmex, Nexo, Coinfloor, HBTC, Gate.io, and Ledn have published their proof-of-reserve.
Others, including Okx, Kucoin, Bitfinex, Deribit, and Bybit, have promised also to publish their proof of solvency and conduct full audits in the coming weeks. Market analyst Nic Carter called the development “another silver lining” of the FTX collapse.