The company tasked with locking down the assets of the faulty crypto exchange FTX says it has managed to recover and secure $740 million in assets, a fraction of the total. billions of dollars are likely to be lost from corporate coffers.
The biggest worry for many FTX customers is that they will never see their money again. FTX failed because of founder and former CEO Sam Bankman-Fried and his subordinates used client assets to bet on a trading company closely related to FTX, Alameda Research. Bankman-Fried is said to be seeking up to $8 billion (approximately Rs 65,330 crore) from new investors to fix the company’s balance sheet.
Bankman-Fried “proved that there is no such thing as a ‘safe’ conflict of interest,” BitGo CEO Mike Belshe said in an email.
The $740 million figure (approximately Rs 6,040) is from Nov. 16. BitGo estimates that the amount of assets secured and recovered may have increased by over $1 billion (approximately Rs 8,170) since that date. .
The assets recovered by BitGo are currently locked in South Dakota in what is known as “cold storage,” meaning they are cryptocurrency stored on hard drives not connected to the Internet. BitGo offers what is known as a “qualified custodian” service under South Dakota law. It is essentially the crypto equivalent of a financial trust, providing segregated accounts and other security services for locking digital assets.
Several crypto companies failed this year when Bitcoin and other digital currencies have declined in value. FTX failed to encounter the crypto equivalent of a bank withdrawal, and initial investigations found that FTX employees mixed customer holdings with their own. are investing.
“Trading, funding and custody need to be different,” says Belshe.
The recovered assets include not only Bitcoin and Ethereumbut also a collection of small cryptocurrencies that vary in popularity and value, such as the shiba inu coin.
California-based BitGo has a history of asset recovery and security. The company was tasked with securing the assets after crypto exchange Mt. Gox failed in 2014. The company is also a custodian of assets held by the El Salvador government as part of that country’s experiment in using bitcoin as legal tender.
FTX is paying Bitgo $5 million (about Rs. 40 crore) and $1,00,000 (about Rs. 81 lakh) a month for its services.