FTX has US$1.24b cash balance ahead of bankruptcy hearing

FTX has a total cash balance of US$1.24 billion, a court filing by advisers on the stricken crypto exchange’s restructuring showed ahead of US bankruptcy hearings set for later on Tuesday (Nov 22).

The collapse of FTX, once one of the world’s largest cryptocurrency exchanges, has left an estimated one million creditors facing losses totalling billions of dollars.

Its cash balance as of Sunday was “substantially higher” than previously thought, Monday’s filing by Edgar Mosley of Alvarez & Marshal, a consultancy firm advising FTX, said.

It includes around US$400 million at accounts related to Alameda Research, the crypto trading firm owned by FTX founder Sam Bankman-Fried, and US$172 million at FTX’s Japan arm.

FTX, which said on Saturday it has launched a strategic review of its global assets and is preparing for the sale or reorganisation of some businesses, had previously said that it owes its 50 biggest creditors nearly US$3.1 billion.

Reuters has reported Bankman-Fried secretly used US$10 billion in customer funds to prop up his trading business, and that at least US$1 billion of those deposits had vanished.

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FTX’s fall from grace has sent shivers through the crypto world, driving bitcoin to its lowest level in around two years and triggering fears of contagion among other firms already reeling from the collapse in the crypto market this year.

Major US crypto lender Genesis said on Monday it was trying to avert bankruptcy, days after FTX’s collapse forced it to suspend customer redemptions.

“Our goal is to resolve the current situation consensually without the need for any bankruptcy filing,” a Genesis spokesperson said in an emailed statement to Reuters, adding that it continues to have conversations with creditors.

A Bloomberg News report, citing sources, had said Genesis was struggling to raise fresh cash for its lending unit, and warning investors it may need to file for bankruptcy if it does not find funding.

The Wall Street Journal reported, citing sources, that Genesis had approached Binance seeking an investment but the crypto exchange decided against it, fearing a conflict of interest. Genesis also approached private equity firm Apollo Global Management for capital assistance, the WSJ said.

Apollo did not immediately respond to a Reuters request for comment on the WSJ report, while Binance declined to comment.

Genesis Global Capital suspended customer redemptions in its lending business last week, citing the sudden failure of FTX.

Crypto exchange Gemini, which runs a crypto lending product in partnership with Genesis, tweeted on Monday that it was continuing to work with the company to enable its users to redeem funds from its yield-generating “Earn” programme.

Gemini said on its blog last week there was no impact on its other products and services after Genesis paused withdrawals.

Since the implosion of FTX, some crypto players are taking to decentralised exchanges known as “DEXs” where investors trade peer-to-peer on the blockchain.

Overall daily trading volumes on DEXs leapt to their highest level since May on Nov 10, as FTX imploded, according to data from market tracker DeFi Llama, but have since pared gains. REUTERS