Sources recently reported that approximately $333 million worth of Bitcoins (BTC) linked to FTX wallets had disappeared before the crypto exchange filed for bankruptcy protection.
On November 5, FTX still held 20,176.84 BTC units in its reserves. The number went down to 220.26 units on November 6. The next day, its BTC reserve was down to 0.25.
The crypto exchange eventually filed for bankruptcy protection on November 11. Per November 19, data showed that FTX held seven BTC units.
🚨🚨 $BTC Exchange Reserves on #FTX hits 0 (ZERO !!)
— Maartunn (@JA_Maartun) November 7, 2022
Let's pray in the name of Satoshi that this isn't a exit scam and those coins have (just) moved to unlabelled FTX-wallets 🥶
Data by @cryptoquant_com
#Bitcoin #Crypto #Onchain #Data #Investments pic.twitter.com/Vazv6lzk0s
According to data in April 2021, FTX used to keep $3.3 billion worth of BTC or around 75,303 units when the token traded at $46,000 per unit.
The reserve dropped to 20,000 units on September 2021 and stayed in that range until before its bankruptcy. In mid-2022, FTX was the 11th largest crypto exchange in BTC holdings.
Previously, on-chain data reported that an unknown party had stolen 228,523 Ether (ETH)—worth around $$268 million per November 21—from FTX on the day it filed for bankruptcy. The ownership of these stolen ETHs made the hacker one of the biggest ETH holders in the world.
According to reports, the unknown party had converted the ETHs into renBTC and wrapped BTC (wBTC) through aggregator 1inch Exchange. Although rumors believe the funds have been sent to the Bahamas, Chainalysis said that the funds had gone elsewhere, somewhere undetectable.
FTX filed for bankruptcy due to a deficiency on its balance sheet. FTX founder and former CEO Sam Bankman-Fried allegedly mishandled customer funds, sending them to its trading firm, Alameda Research. A large number of customers are unable to pull out their funds from the exchange.
Regulators in several regions have started investigations on FTX and its executives, including the U.S. Securities and Exchange Commission (SEC). In the Bahamas, where FTX’s headquarter resides, authorities have frozen its assets.
Contagion. pic.twitter.com/7E58GB2LbP
— Bitcoin (@Bitcoin) November 20, 2022
In addition to regulatory scrutiny, FTX's insolvency also affected some crypto companies. Crypto lender BlockFi has been reported to be at risk of bankruptcy as most of its assets are held by FTX. Two weeks ago, BlockFi halted customer withdrawals following news of FTX’s balance issue.
FTX owes creditors $3.1 billion
Reports revealed that the crypto exchange owed $3.1 billion to its 50 largest creditors. In a bankruptcy filing, FTX also reported owing money to more than one million people and businesses due to its collapse.
Analysts said these people might have received only a fraction of their investments back after the bankruptcy proceedings. According to these analysts, investors might need to wait for “decades” to receive their funds back from the now-defunct crypto exchange.
Co Cordis insolvency lawyer Stephen Earel explained that the liquidation process would be an “enormous exercise.” Earel said that conflicting jurisdictions complicated the process. According to him, users needed to queue with investors and venture capitalists in the bankruptcy proceedings.
BnkToTheFuture founder Simon Dixon said that everyone who had reserved funds in the exchange would be named a creditor, and they would only receive assets that remained in FTX after deducting bankruptcy costs.
The latest report showed FTX creditors had also discussed possible actions like sales and reorganization with Perella Weinberg Partners (PWP). However, FTX warned creditors that engaging with PWP was “subject to court approval.”