Approximately 74% of the $8.7B Owed by FTX to Customers Comprised Fiat and Stablecoin Holdings.

About 74% of $8.7B Owed by FTX to Customers was in Fiat and Stablecoin Funds. Bankrupted digital asset marketplace FTX was indebted to its clients with a staggering $8.7 billion, out of which roughly 74% or $6.4 billion was wrongfully diverted fiat money and stablecoins, as stated in a report unveiled on Monday.

Key TakeAway

• A fresh disclosure by the FTX insolvency panel reveals that the defunct cryptocurrency platform is accountable for a staggering $8.7 billion in client liabilities.
• The overwhelming majority of wrongfully appropriated holdings, approximately $6.4 billion, are valued in either conventional currency or stablecoins.
• The disclosure further unveils that FTX and its affiliated debtors have successfully recuperated nearly $7 billion worth of assets, with the retrieval endeavor still in progress.

What Implications Does This Have for FTX Clients?

The findings of the FTX insolvency committee, spearheaded by recently appointed CEO John J. Ray III, present the second comprehensive evaluation of the exchange's fiscal state subsequent to its demise in November. The report now provides a quantified assessment of the indebtedness owed by the collapsed platform to its clientele—an astonishing $8.7 billion.

The investigation has exposed instances of intermingling and mishandling of customer deposits, with approximately $6.4 billion of the total owed amount consisting of wrongfully appropriated conventional currency and stablecoins.

Thus far, a sum of $7 billion in fluid assets has been reclaimed, and endeavors are in progress to pinpoint supplementary recoveries. Nevertheless, the report also appends, "It is imperative to acknowledge that this evaluation is an ongoing process, unfinished, and susceptible to alterations."

Intentional Manipulation and Co-Mingling Revealed as Deliberate Strategy

The released report unveils a damning portrayal of the company's leadership and senior legal advisors, who knowingly mishandled client funds, employing deceitful tactics such as fabricating records and evading detection by relocating the FTX Group to different jurisdictions.

Specifically, it discloses that FTX Group deliberately provided false information regarding the nature of the bank account held by the affiliated trading firm, Alameda Research, which was utilized for processing customer funds.

In a statement, Ray, spearheading the recovery endeavors, emphasized that the perception of FTX as a customer-centric industry frontrunner was nothing more than a façade from the earliest stages.

The deliberate co-mingling and misuse of customer deposits by the FTX Senior Executives was no accident,"Ray stated in the report. "The co-mingling and misuse occurred under their direction and as per their strategic design."

The report's findings come subsequent to an initial investigation conducted in April, which exposed several instances of misconduct under the oversight of founder and former CEO Sam Bankman-Fried, who currently faces criminal charges scheduled for trial in New York in October.

Amidst bankruptcy proceedings in Delaware, Ray has been diligently working towards resolving the affairs of the exchange since its collapse in November. While there have been indications of a potential relaunch of FTX operations as FTX 2.0, the primary focus remains on addressing financial obligations and seeking restitution for creditors.