The plan promises to return 118% of claims in cash to most creditors, who represent about $6.83 billion in claims by value.

A plan to reorganize bankrupt crypto exchange stalwart FTX has gained support from 94% of creditors who were clients of the FTX.com offshore exchange, the so-called Dotcom creditors, results of a vote from restructuring agent Kroll show.

The plan promises to return 118% of claims in cash to most creditors, who represent about $6.83 billion in claims by value. Two classes of creditors did not return ballots and are presumed to accept the plan, Kroll said.

With creditor approval secured, the next step is for the bankruptcy court to confirm the reorganization plan. A hearing is set for Oct. 7. Potential challenges remain, however, including possible objections from the U.S. Securities and Exchange Commission regarding the use of stablecoins for repayments, as previously reported.

The post FTX Dotcom Creditors Vote Massively in Favor of Reorganizing Plan appeared first on Crypto Insider.

OPNX’s volume peaked at just over $600,000, according to CoinGecko data.

OPNX, the exchange for trading of bankruptcy claims set up by the founders of failed cryptocurrency hedge fund Three Arrows Capital, is closing because the bankruptcy process of failed crypto exchange FTX has reached “recovery,” co-founder Su Zhu said.

FTX said earlier this week that it planned to fully repay its customers, albeit using market prices from a date just after the crypto crash it caused. On some platforms, FTX bankruptcy claims were trading at 13 cents on the dollar in the months following its collapse.

“The FTX recovery marks the end of crypto claims estates. The OX community will be focusing on Ox.Fun now, and wish to congratulate the FTX estate holders on their full recovery,” Zhu said in a statement provided by co-founder Kyle Davies on Telegram. Davies said the two are advisers to Ox.Fun, a recently launched derivatives exchange, focused around the Ox token.

OPNX struggled to gain a foothold with the broader market, and trading volume peaked at $624,093, according to CoinGecko data. After its much-hyped launch, less than two dollars of trades were executed in its first 24 hours, CoinDesk reported at the time.

OPNX CEO, Mark Lamb is facing legal challenges in Hong Kong from creditors of struggling Seychelles-based crypto exchange CoinFLEX, who allege the transition from CoinFLEX to OPNX was unauthorized. Lamb did not return a request for comment sent by Telegram.

The post OPNX Founder Su Zhu Says Shutdown Comes Because FTX Estate Claims Reached ‘Recovery’ appeared first on Crypto Insider.

Options also include a sale of the exchange, which boasted 9 million users before going bankrupt.

Bankrupt crypto exchange FTX has received multiple bids for a potential restart, investment banker Kevin Cofsky of Perella Weinberg Partners said Tuesday during a court hearing.

At least three bidders are in the running to buy the exchange, which traded tens of billions of dollars a day at its peak.

A decision will be potentially made by mid-December, as part of plans to be submitted to the Delaware bankruptcy court for approval. Cofsky’s testimony contributed to a successful bid to keep the platform’s list of over 9 million customers secret, given that such information might prove valuable to a potential buyer.

“We’ve narrowed the field from a large number to a smaller number in what we’re calling our second round,” Cofsky said at the court hearing, referring to the parties with whom he’s discussing wind-up options. “I am optimistic that we will have either a plan for a reorganized exchange, a partnership agreement or a stalking horse for a sale, on or prior to the December 16 milestone date.”

FTX collapsed last November after CoinDesk published revelations concerning the state of its balance sheet. New CEO John J. Ray III has excoriated financial controls at the company, and founder Sam Bankman-Fried is on trial for criminal charges.

Ray has floated an amended proposal which could see 90% of whatever assets the estate manages to muster returned to creditors.

The post Sam Bankman-Fried’s Defunct Exchange FTX Receives Multiple Bids for Restart appeared first on Crypto Insider.

In the run-up to FTX’s bankruptcy filing, known as the Preference Period, the defendants received the benefit of withdrawals that constitute preferential transfers, the filing said.

Bankrupt crypto exchange FTX has sued former employees of Salameda, a Hong Kong-incorporated entity affiliated with FTX that it says was controlled by the firm’s ex-CEO, Sam Bankman-Fried, to recover about $157.3 million, according to a court filing late Thursday.

The filing alleges Michael Burgess, Matthew Burgess, their mother Lesley Burgess, Kevin Nguyen, Darren Wong and two companies owned or controlled several firms that had accounts registered at FTX.com and FTX US, and fraudulently withdrew assets in the days leading up to FTX’s bankruptcy.

During the 90 days before the Nov. 11, 2022 bankruptcy filing, known as the Preference Period, the defendants received the benefit of withdrawals that constitute preferential transfers and “are avoidable under the Bankruptcy Code,” the filing said. The defendants raced to withdraw assets and exploited their connections to FTX personnel to ensure they would be prioritized over other customers, according to the filing.

This isn’t the first time the FTX bankruptcy estate has tried to claw back payments from related parties. It has already targeted Bankman-Fried and his executives, Bankman-Fried’s parents and FTX’s philanthropic and life science arms. It’s also trying to reclaim payments made to Genesis Global Capital, which is owned by CoinDesk’s parent, Digital Currency Group, and is also bankrupt. In January, a bankruptcy attorney said FTX had recovered more than $5 billion in different assets. In June, the bankruptcy team said the company owed its customers $8.7 billion.

The filing also alleges, citing messages on communications application Slack, that Matthew Burgess enlisted other FTX employees to “push out” certain pending withdrawal requests from one of Michael Burgess’ FTX US exchange accounts while misrepresenting the account as his own.

The transfers were completed just hours before FTX halted withdrawals on Nov. 8, 2022. More than $123 million of the total $157.3 million (based on Aug. 31, 2023, pricing) were withdrawn on or after Nov. 7.

The transfers were made “with the intent to hinder, delay or defraud FTX US’s present or future creditors,” the filing said.

Bankman-Fried is currently in jail preparing for his trial, scheduled to start on Oct. 3. On Thursday, an appeals court rejected his attempt to get out of jail before the start of the proceedings.

The post FTX Sues Former Employees of Hong Kong Affiliate, Seeks $157 Million appeared first on Crypto Insider.

Liquidations refer to the forced closure of bullish long and bearish short positions in leveraged perpetual futures markets and often exacerbate price moves.

Bitcoin (BTC) has surged 70% this year, hitting nine-month highs of over $29,000. While the sharp rally has brought the derivatives market back to life, the overall use of leverage remains muted, suggesting a low risk of “liquidations-induced” wild price swings.

Liquidations refer to the forced closure of bullish long and bearish short positions in leveraged perpetual futures markets, which allow traders to open positions worth much more than the money deposited as margin. The forced closure for cash or cash equivalent happens when the trading entity fails to meet the margin shortage stemming from the market moving against its bullish/bearish bet.

When the degree of leverage in the market – measured by the ratio between the dollar value locked in perpetual futures (open interest) and the cryptocurrency’s market capitalization – is high, short liquidations tend to exacerbate bullish moves. That, in turn, shakes out more shorts, leading to a short squeeze. Similarly, long liquidations exacerbate bearish moves, leading to a long squeeze.

Long/short squeezes were quite common during the 2021 bull run and early bear market days of 2022 when the amount of leverage outstanding relative to the size of the market was quite high and price moves would shake out billions of dollars worth of leveraged trading positions. So far this year, the ratio has continued to drop.

“High open interest relative to market cap means the market could be vulnerable to a short-squeeze or liquidation cascade, which would result in a price swing being more volatile than it otherwise would have been due to forced buying or selling, respectively,” analysts at Blockware Solutions said in a weekly newsletter.

“The medium-term trend of decreasing open interest/market cap has not been broken, which is reassurance that, even in the event of downward volatility, price is most likely not going to decrease to the level it was at to begin the year,” analysts added.

The perpetual futures open interest to market ratio has been falling since FTX, formerly the third-largest cryptocurrency exchange and one of the preferred avenues to trade perpetual futures, went bust in early November.

The ratio has stayed low despite the recent price consolidation, a sign of low investor risk appetite, according to Blockware Solutions.

The post Bitcoin Faces Low Risk of ‘Liquidations-Induced’ Price Volatility After 70% Surge appeared first on Crypto Insider.

The agreement requires approval from a Delaware bankruptcy court as the failed exchange seeks to raise funds for creditors.

FTX’s investment arm, Alameda Research, has struck a $45 million cash deal to sell its interest in Sequoia Capital to the Abu Dhabi sovereign wealth fund, according to court documents filed Wednesday.

The deal, subject to approval by Delaware bankruptcy judge John Dorsey, is part of the bankrupt company’s attempts to sell its investments in early stage crypto and tech ventures in a bid to repay creditors.

FTX “decided to enter into the Agreement with Purchaser based on its superior offer and ability to execute the Sale Transaction within a short time frame,” after receiving indications of interest from four parties and entering into negotiations with two for the sale of assets in the Sequoia Capital Fund, the document said.

The agreement could be closed as soon as March 31, though deals made by bankrupt companies are subject to close judicial scrutiny. The would-be buyer, Al Nawwar Investments RSC Limited, is ultimately owned by the government of Abu Dhabi, and already invests in Sequoia, the document said.

FTX group filed for bankruptcy in November, and Dorsey granted permission in January for some of FTX’s more easily separable assets to be offered for sale. Those included derivative arm LedgerX, stock-clearing platform Embed, and Japanese and European units. FTX management have said there’s still a massive balance-sheet shortfall, not helped by poor record keeping at the company.

The post FTX Reaches $45M Deal to Sell Interest in Sequoia to Abu Dhabi’s Investment Arm appeared first on Crypto Insider.

FTX’s bankruptcy proceeding has teams of lawyers, investment bankers, consultants, and financial advisers working on the case.

The army of professionals working on the FTX bankruptcy case has billed a collective $38 million plus expenses for the month of January, according to court records.

Bankruptcy administrators have retained law firm Sullivan & Cromwell as counsel. They have also retained Quinn Emmanuel Urquhart & Sullivan as well as Landis Rath & Cobb to act as special counsel for the proceedings.

Consultancy AlixPartners was retained to primarily conduct forensic analysis on DeFi products and tokens in FTX’s possession.

Meanwhile, the financial services firms Alvarez & Marsal as well as Perella Weinberg Partners were retained to sort through FTX’s accounting records and determine which assets it can sell.

According to court filings, Sullivan & Cromwell billed $16.8 million for January while Quinn Emanuel Urquhart & Sullivan billed $1.4 million, and Landis Rath & Cobb billed $663,995.

Collectively the three firms have over 180 lawyers assigned to the case and over 50 non-lawyer staff such as paralegals.

Court filings show that Sullivan & Cromwell lawyers and staff billed a total of 14,569 hours for January. The largest project Sullivan & Cromwell worked on was discovery, followed by asset disposition and asset analysis and recovery.

Initially, the U.S. Department of Justice had objected to FTX hiring Sullivan & Cromwell, claiming potential conflicts of interest. Sam Bankman-Fried also objected to bankruptcy administrators hiring the firm, claiming that the law firm’s staff had pressured him into filing for bankruptcy in November. In late January, the firm was approved by a Delaware bankruptcy court judge to continue to represent FTX.

In early February, Sullivan & Cromwell submitted a bill for $7.5 million for the first 19 days of bankruptcy work after FTX filed in November.

The majority of billed time for Quinn Emanuel Urquhart & Sullivan was spent on Asset Analysis and Recovery as well as Avoidance Action – legalese for attempts to undo certain transactions that the debtor engaged in before bankruptcy.

For Landis Rath & Cobb, a significant amount of time was billed for hearings, litigation, and asset disposition.

AlixPartners billed $2.1 million for 2,454 hours of work.

Investment bank Perella Weinberg Partners billed $450,000 (its monthly fee), and court documents show it spent a significant amount of time on developing a restructuring strategy as well as correspondence with third parties.

According to its billing breakdown, the bank spent a large amount of time working on the sale of FTX assets LedgerX and FTX Japan. In January, a bankruptcy judge gave the sale a greenlight in order to create liquidity to pay back creditors.

Alvarez & Marsal billed $12.3 million, the second largest charge for the month behind Sullivan & Cromwell. Some of the largest items it billed for were Avoidance Actions, at 3,370 hours, financial analysis, at 1,168 hours, and accounting at 1,106 hours.

In November, shortly after FTX declared bankruptcy, interim CEO John J. Ray III said that the exchange had a “complete failure of corporate controls and such a complete absence of trustworthy financial information.”

Ray, who oversaw the liquidation of Enron and Nortel Networks, called the FTX situation “unprecedented” and something he had never seen in his career.

Ray, for his part, submitted a bill for $305,565 for his work during the month of February.

The post FTX Bankruptcy Special Counsel, Advisers Bill $38M for January appeared first on Crypto Insider.

Charges can wait until the Department of Justice’s case against the FTX founder concludes, a judge said.

The U.S. Securities and Exchange Commission’s case against FTX founder Sam Bankman-Fried will be put on hold until related charges brought by the Department of Justice are dealt with, a U.S. judge said in a Feb. 13 ruling.

U.S. prosecutors last week said a pause would save time and resources, as the DOJ case against Bankman-Fried will likely influence overlapping civil cases. The SEC said Bankman-Fried used customer funds for his lavish lifestyle.

On Tuesday, another civil case brought against the disgraced founder by the U.S. Commodity Futures Trading Commission was also delayed until after the trial.

In December, Bankman-Fried was arrested following the collapse of FTX, and has pleaded not guilty to criminal charges brought against him by the DOJ, which include wire fraud and money laundering.

The post SEC Case Against Bankman-Fried Postponed Pending Criminal Trial appeared first on Crypto Insider.

Planned demands for information on the crypto exchange’s dealings would duplicate the work of the independent examiner who has yet to be appointed, the U.S. Trustee said

Proposals to subpoena FTX founder Sam Bankman-Fried, his immediate family and senior staff of the bankrupt crypto exchange have been opposed by the U.S. Trustee, a branch of the Department of Justice dealing with bankruptcy.

The plans, set to be discussed at a Wednesday hearing, would duplicate any independent examination of the exchange’s downfall, U.S. Trustee Andrew Vara said in a legal filing made Thursday. An independent examiner has yet to be appointed. The examiner issue will be discussed at a Monday hearing, with new FTX Chief Executive Officer John Ray set to give testimony.

“If the Court directs the appointment of an examiner, then his or her charge could be to investigate the same web of entities and transactions” as the proposed requests for information, Vara said. “The bankruptcy court has an obligation to prevent unnecessary expenditures in the administration of an estate.”

FTX filed for bankruptcy on Nov. 11, and Bankman-Fried resigned as CEO the same day to be replaced by restructuring expert Ray. In a Jan. 25 filing, FTX’s new management said Bankman-Fried, his brother Gabriel and his parents could potentially have valuable information about what happened to funds allegedly misappropriated from the company before its collapse.

Potentially key witnesses are not cooperating, FTX said, adding that co-founder Gary Wang and Caroline Ellison, head of FTX’s trading arm Alameda Research, expressly declined to provide requested information.

The U.S. Trustee also opposed a bid to seek information from those who might know about a more than $300 million hack and subsequent laundering of digital assets that took place on Nov. 11-12, whose alleged identities have been redacted from court documents.

A bipartisan group of Senators has been among those calling for an independent examiner into the FTX affair, rather than letting the company do its own probe. In the parallel case of bankrupt crypto lender Celsius, examiner Shoba Pillay produced her report last Tuesday, and in a Feb. 1 filing, Vara argued appointing an examiner for FTX was effectively required by law given the sums at stake.

The post Bankman-Fried Family Subpoenas Opposed by US Government in FTX Filing appeared first on Crypto Insider.

The stock was owned – via a holding company – by Sam Bankman-Fried and FTX co-founder Gary Wang.

The U.S. Department of Justice (DOJ) has seized more than 55 million shares of Robinhood (HOOD) stock owned – via a holding company – by Sam Bankman-Fried and FTX co-founder Gary Wang, according to a court document. The shares were worth just over $456 million based on HOOD’s closing price of $8.25 on Friday.

The stock had been held at an account at U.K.-based brokerage ED&F Man.

The “seized Assets constitute property involved in violations” of crimes such as money laundering and wire fraud reads the court document. Sam Bankman-Fried was formally charged with those and other crimes on Dec. 13.

The Robinhood shares were in principle owned by FTX co-founders Bankman-Fried and Gary Wang through their Emergent Fidelity Technologies holding company. FTX, now run by John Ray III, had asked a judge late last month to freeze the stock. Bankman-Fried naturally opposed the move, saying, in part, he needed the shares to help pay his legal fees.

The U.S. government said it was in the process of seizing a number of assets potentially linked to FTX on Wednesday.

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