FTX's second-quarter report: Losses of approximately $8.7 billion, with $7 billion in liquid assets recovered.

FTX bankruptcy restructuring team releases second interim report, highlighting current deficit of approximately $8.7 billion with around $7 billion in liquid assets recovered. The announcement states that FTX debtors anticipate releasing the third report in this series in August 2023.

Commingling of Funds, owing Users $8 Billion by August 2022

The restructuring team in this second mid-term report continues to mention the misuse of funds by FTX, related subsidiaries, and executives, involving lying to banks, auditing agencies, and distorting facts. The relocation of FTX's headquarters from Hong Kong to the Bahamas was also part of the inappropriate concealment behavior.

The report also emphasizes the team's significant progress in recovering funds. FTX had debts of around $87 billion when it applied for bankruptcy protection last year, with over $64 billion coming from users in fiat currency and stablecoins.

So far, about $70 billion in liquid assets have been recovered, and more funds are expected to be recovered in the future. The image below illustrates the complexity of FTX's fund misappropriation.

Review of the April mid-term report: FTX's first mid-term report reviews the cause of death, SBF confesses: Alameda's finances are in such disarray that auditing is impossible

Misappropriation of Funds for Charity, Venture Capital, Real Estate, Political Donations

The report lists the main uses of misappropriated user funds by FTX, with up to 35 properties in the Bahamas:

• Charity: $4.5 million in donations before the FTX Foundation closed: used to buy a luxury estate from the Renaissance period

  Will the threats from the FTX restructuring team be effective? Several organizations say they will return donations provided by SBF

• Venture Capital: Alameda investment portfolio exposed: tens of millions of dollars to acquire media shares, spanning drones and indoor agriculture

• Real Estate: Stay at a luxury hotel in the Bahamas! Where did your money go that FTX employees squandered?

• Political Donations: One-third of US lawmakers received political donations from SBF, most of whom plan to donate to charity

Spending to Obtain Licenses, Compliance in Just Six Weeks

After China issued a cryptocurrency ban in May 2021, SBF and FTX executives attempted to move to the Bahamas.

The report indicates that in July 2021, an unnamed lawyer bribed a former Bahamian government official with $1 million, hoping to obtain a business license for the Bahamian subsidiary FTX Digital Markets within 10 weeks, which ultimately only took 6 weeks to obtain.

Note: The Wall Street Journal cited sources saying that the lawyer was Daniel Friedberg, FTX's former chief lawyer, emphasizing that the funds were normal expenses and were not handed over to the former official.

Setting Up User Account "Our Korean Friends' Account" to Conceal Debts

The report states that the former CEO of Alameda Research was aware in August 2022 that FTX owed users funds exceeding $8 billion. Therefore, a false user account named "Our Korean Friends' Account" was created on FTX to conceal massive debts of up to $8.9 billion.

Previously reported: SBF instructed FTX executives to allocate around $8 billion in debt from Alameda to the system account "Our Korean Friends' Account"

Establishing a Shell Cryptocurrency Exchange Institution

The report points out that FTX is also committed to silencing those who raise concerns and dismissed an employee who was worried about these practices. FTX's subsidiary North Dimension Inc. was packaged as a cryptocurrency exchange institution with 2,000 trading partners and an average monthly trading volume of $10 million.

However, it was actually a shell company used to handle user deposits and withdrawals for the Bahamian exchange.

When a lawyer raised concerns about this, FTX immediately fired the lawyer who had been in the position for less than three months.

Is There Really Progress in the Restructuring Team?

In fact, strictly speaking, the "second" mid-term report of the FTX restructuring team seems to have made little substantive progress. As early as April this year, the team's lawyer claimed at a hearing to have recovered $7.3 billion in cash and crypto assets, but after two months of turmoil, it has shrunk by $3 billion? Apart from the "license purchase" incident, the report repeatedly states known facts, and we can almost cite old reports from a few months ago to prove that this is not news. Is the restructuring team exhausted?