CEFI

Analyzing FTX's team restructuring report, where did the $5.5 billion come from? SBF refutes accusations that FTX US is insolvent.

share
Analyzing FTX

FTX has restructured its team and released good news for creditors. According to their press release and asset management report, similar to their previous statements at the hearing, they have spent significant efforts identifying approximately $5.5 billion in liquid assets and emphasized that both FTX and FTX.US are undercollateralized, with SBF subsequently issuing a rebuttal.

$5.5 Billion in Liquid Assets

$1.7 Billion Cash

  • $1.2 Billion Unrestricted Cash

  • $189 Million Custodial Cash

  • $6.4 Million Restricted Cash

$3.5 Billion in Cryptocurrency and FTT Tokens

  • Hot Wallet Holdings $1.761 Billion

  • BitGo Cold Wallet Custody $1.144 Billion

  • Bahamian Regulatory Agency $426 Million

  • FTX JP $140 Million

The $415 Million under suspicion for hacking is not included in the calculation. The $140 million assets held by FTX Japan are segregated in a 1:1 ratio in cold wallets from user liabilities, some of which may be for the restructuring team, meaning these $140 million have nothing to do with non-Japanese users.

$300 Million in Securities

  • BlackRock Equity around $100,000

  • Grayscale Bitcoin Trust $197 Million

  • Grayscale Ethereum Trust $45 Million

  • Grayscale Ethereum Classic Trust $4 Million

  • Bitwise Top 10 Crypto Index Fund $21 Million

Real Estate Rough Estimate $253 Million

Due to the illiquidity of real estate assets, the restructuring team did not include them in the calculation. They estimate that SBF initially spent around $253 million, holding 15 real estate properties around the Albany Marina area totaling $166 million.

Estimated Real Estate Expenses

Various competitive coins were also not included in the calculation due to poor liquidity.

In fact, FTT liquidity has also declined significantly. Should FTT also not be included in that $5.5 billion? Venture partner Adam Cochran also raised similar concerns on Twitter here.

Illiquid Assets

Confirmation that FTX and FTX.US Are Insolvent

As of now, the restructuring team indicates that assets related to FTX users are about $1.6 billion and FTX.US is $181 million, hence they claim both are insolvent.

This statement prompted a strong rebuttal from SBF.

SBF published a lengthy article stating that the restructuring team did not specify the total user liabilities in the report and forgot to include $428 million cash in FTX.US bank accounts.

He believes that the total user liabilities of FTX.US are definitely less than $428 million, so the restructuring team's claim that FTX.US is insolvent is incorrect.

The restructuring team mentioned several operations to be carried out in the future:

  • Auctioning Bahamian real estate

  • Attempting to sell four FTX subsidiaries

  • Thoroughly investigating all pre-bankruptcy transactions

  • Selling off past strategic investments with a book value of $4.6 billion. See below