News — FTX

FTX Adds Half a Billion Dollars to Creditor Asset Pool

FTX has reached a settlement with Bahamas-based hedge fund Modulo and proposed to sell its stake in Mysten Labs, as its recovery team continues its mission to recover funds.

, and Blockhead

24 March 2023 . 1:30 PM

2 min read

John J. Ray III, FTX's new CEO and the man responsible for overseeing the restructuring of the bankrupt crypto exchange, has added over half a billion dollars to the asset pool for creditors this week, according to reports by Reuters.

The bulk of the haul, or US$460 million, is coming from Bahamas-based Modulo Capital, which has agreed to return US$404 million in cash that FTX and Alameda staked its hedge fund operations with, as well as release its own claim to US$56 million of assets still locked up on the dormant FTX's crypto exchange, according to a filing in U.S. bankruptcy court in Delaware. In return, the bankruptcy team will not take any further actions against Modulo’s management.

Another US$95 million is tied to a proposed deal to sell FTX’s stake in Mysten Labs back to the startup’s founders, former Meta executives. The share repurchase, disclosed Thursday (March 23), has not yet been finalized and remains subject to higher bids and court approval.

Modulo was one of former FTX CEO Sam Bankman-Fried's largest investments – he paid $25 million to acquire a stake in the hedge fund, which launched in 2022 and operated in the same Bahamian condo community that he lived in – and contributed $450 million to an investment fund managed by the trading firm at a time when FTX was losing money and heading toward bankruptcy, according to court filings.

This means the transfers are open to being challenged and potentially clawed back as a part of FTX’s bankruptcy process if they were revealed to be made using misappropriated money that FTX customers had deposited with the exchange.

Recovery efforts continue

Blockhead previously reported on the "massive shortfall" in assets faced by FTX. Last month, US$2.2 billion in total assets were identified in the wallets of the accounts associated with FTX.com, of which US$694 million are classified as the most liquid “Category A Assets” that include stablecoins, fiat, BTC, and ETH.

The FTX liquidators first announced the recovery of more than $1 billion in customers’ assets in December 2022. In January, FTX’s lawyers revealed the recovery of $5 billion worth of assets. FTX affiliate Alameda Research also sued crypto asset manager Grayscale on March 6 to claw back at least $250 million.