NEW YORK (AP) — The company tasked with freezing the assets of bankrupt cryptocurrency exchange FTX says it has managed to recover and protect $740 million worth of assets so far, just a fraction of the potential billions of dollars likely missing from company treasury.
The numbers were revealed Wednesday in court documents from FTX, which hired cryptocurrency custodian company BitGo just hours after FTX filed for bankruptcy on Nov. 11.
The biggest worry for FTX customers is that they will never see their money again. FTX failed because its founder and former CEO, Sam Bankman-Fried, and his deputies used client assets to place bets at Alameda Research, a trading firm closely associated with FTX. Bankman-Fried was reportedly seeking more than $8 billion from new investors to restore the company’s balance sheet.
Bankman-Fried “proved that there is no such thing as a ‘safe’ conflict of interest,” BitGo CEO Mike Belshe wrote in an email.
The $740 million figure refers to November 16th. Since that date, BitGo estimates that the amount of recovered and secured assets likely exceeded $1 billion.
The assets recovered by BitGo are now locked in South Dakota in what is called “cold storage,” which means they are cryptocurrencies stored on hard drives that are not connected to the internet. BitGo provides so-called “qualified custodian” services under South Dakota law. It is essentially the crypto equivalent of fiduciary finance, offering separate accounts and other security services to lock down digital assets.
Several crypto companies have failed this year as bitcoin and other digital currencies have collapsed. in price. FTX failed when faced with the crypto equivalent of a bank run, and early investigations found that FTX employees were mixing assets held for clients with assets they invested.
“Trading, financing and storage should be different,” Belshe said.
The returned assets include not only bitcoin and ethereum, but also a set of minor cryptocurrencies that vary in popularity and value, such as the Shiba Inu coin.
California-based BitGo has experience in recovering and protecting assets. The company was tasked with protecting assets after the Mt.Gox cryptocurrency exchange collapsed in 2014.
FTX pays Bitgo a $5 million fee and $100,000 per month for its services.