Market Analysis Report (23 Nov 2022)

Lawyers representing the collapsed cryptocurrency exchange FTX have said that a “substantial amount of assets have either been stolen or are missing” at a bankruptcy hearing in federal court in Delaware.

The exchange filed for bankruptcy earlier this month after a bank run left it owing $8 billion and revealed it did not hold users’ funds properly. Its collapse sparked investigations by the U.S. Securities and Exchange Commission (SEC) and the Justice Department on whether it misappropriated customer funds via loans to Alameda Research, its sister company.

FTX’s downfall has left retail investors and major firms scrambling to recover billions that had been deposited on its platform. The bankruptcy process will determine how much of the deposited funds can be retrieved.

James Bromley, a partner at the law firm Sullivan & Cromwell who is representing FTX, said at the hearing that former CEO Sam Bankman-Fried’s poor management has left lawyers with limited information on the firm’s finances.

Per his words, assets are missing after FTX faced “cyberattacks,” referring to what appears to have been a hack on the exchange the day it filed for bankruptcy. The hacker has since sold off the stolen funds to ETH, which were then converted to renBTC, a tokenized BTC token connected to Alameda.