FTX advisers have found more than $5 billion it could sell to pay off creditors, judge is told

FTX advisers have found more than $5 billion in cash or cryptocurrency assets that could be used to pay off creditors, a court has heard.

Attorney Andrew Dietderich told Delaware bankruptcy judge John Dorsey that the company was working to liquidate the assets, which alone have a book value of $4.6 billion of “non-strategic investments.”

It adds to the $425 million worth of crypto being held by the Bahamas Securities and Exchange Commission following the company’s implosion last year.

In November, FTX lost more than $8 billion of its clients’ money, owing its 50 largest unsecured creditors a total of $3.1 billion.

Dietderich told the hearing that cash was still missing in what is owed to clients, but the full amount was unclear.

Meanwhile, the judge granted FTX’s new chief executive, John Ray III, who replaced Sam Bankman-Fried, the right to keep the identities of his nine million accounts secret.

Dietderich told the hearing that the firm identified around 120 billion transactions that were sent on the platforms of the fallen crypto giant.

The start of Wednesday’s hearing began with the judge announcing a letter he received from four US senators urging him to appoint an independent examiner.

They stated that FTX lawyers may have conflicts that would make it difficult for them to conduct an independent investigation.

But Dorsey said the letter would not sway him. And he added: ‘It is an inappropriate ex parte communication. It will have no impact on my decisions.

It comes just days after the DOJ seized $464 million worth of Robinhood shares owned by disgraced FTX founder Sam Bankman-Fried, despite his plea to access the shares to pay his legal fees.

In a court filing on Friday, federal prosecutors confirmed the seizure of Robinhood’s 55.3 million shares and an additional $20.7 million in cash from British brokerage ED&F Man Capital Markets under criminal and civil forfeiture orders.

The shares were held by Emergent Fidelity Technology, a company owned 90 percent by Bankman-Fried, with Zixiao ‘Gary’ Wang, another former FTX executive, holding a 10 percent stake.

Robinhood’s shares had been the subject of legal disputes in the bankruptcy proceedings of crypto exchange FTX, but the DOJ seizure makes the matter moot, putting the shares out of the hands of either party for now.

FTX’s current management, led by CEO Ray III, had sought a court order to freeze the shares to help pay off the company’s creditors.

Bankman-Fried’s lawyers responded in a court filing Thursday, arguing that Emergent was not a party to the bankruptcy and saying it needed access to the shares to help pay its legal fees.

Bankman-Fried, whose net worth was once estimated at $15.6 billion, says he has about $100,000 left in cash reserves after his cryptocurrency exchange crashed. He was later accused of fraud.

After pleading not guilty to eight federal fraud and conspiracy charges earlier this week, he faces a costly legal battle if the matter goes to trial.

“Bankman-Fried requires some of these funds to pay for his criminal defense,” his lawyers argued in last week’s motion.

Bankrupt crypto company BlockFi, FTX, and liquidators in Antigua have claimed Robinhood’s shares, along with Bankman-Fried’s own claim in bankruptcy court.

But the Justice Department did not believe Robinhood’s shares were owned by a bankrupt estate, US attorney Seth Shapiro told US bankruptcy judge John Dorsey, who is overseeing the FTX bankruptcy, last week.

Shapiro said the competing claims over the shares of the stock trading app could be resolved in a forfeiture proceeding.

Prosecutors accused Bankman-Fried of participating in a years-long “fraud of epic proportions” that cost investors, clients and lenders potentially billions of dollars by using client deposits to prop up his Alameda hedge fund. research.

Bankman-Fried has pleaded not guilty to wire fraud and conspiracy charges. He has acknowledged failings in risk management at FTX, but has said he did not believe he was criminally responsible.

Last May, Bankman-Fried bought about 7.42 percent of Robinhood’s shares through Emergent, using funds borrowed from Alameda Research, according to an affidavit it filed in December with an Antigua court.

Bankman-Fried said he owned 90 percent of Emergent and Wang, another former FTX executive, owned 10 percent.

Wang has pleaded guilty to fraud charges over the FTX collapse and is cooperating with prosecutors in a bid for leniency.

Shapiro also said prosecutors had seized US bank accounts affiliated with FTX’s business in the Bahamas, known as FTX Digital Markets.

Court records show the accounts at Silvergate Bank and Farmington State Bank, which does business as Moonstone Bank, held about $143 million.

James Bromley, an attorney for FTX, told Dorsey that none of the assets being seized are currently under the direct control of any of the FTX entities in Chapter 11. He said that Robinhood’s shares were subject to litigation and that it was an “open question”. about who owns them.

Robinhood shares, which opened Monday at $8.40 a share, are also being claimed by BlockFi Inc, another bankrupt crypto company, as well as the liquidators of Emergent, which is in insolvency proceedings in Antigua, where it is based. constituted.

BlockFi is suing Emergent in an attempt to seize Robinhood shares, which Alameda pledged as collateral to guarantee repayment of a loan made by BlockFi. Two days after the pledge, Alameda filed for bankruptcy along with FTX.

BlockFi did not immediately respond to a request for comment from DailyMail.com on Monday morning.