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☆ FTX Discloses ‘Substantial Shortfall’ of Customer Assets
▼ + stars: | 2023-01-18 | by ( Alexander Saeedy | ) www.wsj.com time to read: 1 min

Bankrupt cryptocurrency exchange FTX hasn’t found enough cash and assets to make customers whole, suggesting a long road ahead as it works to get money back to the platform’s users.FTX said Tuesday that a probe of its balance sheet has shown its holdings of customer funds are lower than the exchange’s internal accounts had indicated, a sign that customers’ cryptocurrency was moved out of custodial accounts without their knowledge. FTX also said it found that a small group of individuals at the company had the ability to remove digital assets from the exchange without any recordkeeping. “Based on current estimates of the...

☆ FTX Reaches Agreement With Bahamas Liquidators on Asset Recovery
▼ + stars: | 2023-01-07 | by ( Alexander Saeedy | ) www.wsj.com time to read: 1 min

FTX’s new management and liquidators in the Bahamas have signed an agreement to cooperate and collect assets on behalf of creditors, capping off a prolonged row between the two parties over who controls the bankrupt exchange’s remaining property. The parties have agreed to share information, as well as help to secure and distribute assets that belong to FTX entities in the Bahamas and abroad, according to a Friday press release. FTX had been headquartered in the Bahamas since 2021 and its international exchange was overseen by Bahamian regulators.

Genesis has sought lifelines in the form of an emergency loan of $1 billion from investors. Massive crypto lender Genesis Global Trading Inc. laid off 30% of its staff and is considering filing for bankruptcy, according to people familiar with the matter, the latest sign of financial turmoil at the crypto lender. The layoffs weren’t confined to one department and were across the company, some of the people said. Genesis has 145 employees left after Thursday’s layoffs.

The government says it has seized or is in the process of seizing Robinhood shares whose ownership is disputed by FTX and BlockFi. Federal authorities are moving to seize hundreds of millions of dollars in assets in the U.S. tied to the bankrupt cryptocurrency exchange FTX, a sign that the battle over control of the company’s remaining funds is escalating. Seth Shapiro, a Justice Department official, said at an FTX bankruptcy court hearing Wednesday that the federal government has seized or is in the process of seizing Robinhood shares whose ownership is disputed by FTX and BlockFi, a cryptocurrency lender that collapsed in late November. The Wall Street Journal previously reported that the dispute involves 56 million shares.

☆ Judge Ordered Seizure of Money from FTX Digital Markets Accounts at Silvergate
▼ + stars: | 2023-01-05 | by ( Peter Rudegeair | Alexander Saeedy | ) www.wsj.com time to read: 1 min

A federal judge recently ordered the seizure of about $93 million that an FTX unit was keeping in accounts at Silvergate Capital Corp., according to a court filing Wednesday. Silvergate disclosed the seizure in a filing to a Delaware bankruptcy court handling the insolvency of FTX Digital Markets, a Bahamian-based subsidiary of crypto exchange FTX. The joint provisional liquidators of FTX Digital Markets in the Bahamas previously asked the court on Dec. 23 to transfer the $93 million out of Silvergate to “ensure the safety” of the funds.

FTX co-founder Sam Bankman-Fried is planning to consent to extradition to the U.S. to face criminal charges related to the cryptocurrency exchange’s collapse, people familiar with the matter said. Mr. Bankman-Fried has been in custody in the Bahamas since he was arrested on Monday in connection with a slate of U.S. criminal charges, which were unsealed a day later. Federal prosecutors in Manhattan have charged Mr. Bankman-Fried with fraud and money-laundering offenses, alleging he defrauded customers, lenders and investors. They also alleged he violated campaign-finance rules by making illegal political contributions.

Avaya Holdings Corp. is nearing a chapter 11 bankruptcy filing to restructure its balance sheet as it looks to turn around its business and move past problems surrounding the company’s accounting, people familiar with the matter said. Avaya disclosed earlier this week it has reviewed various restructuring proposals from competing creditor groups. One plan, supported by a senior lender group including Apollo Global Management , would significantly reduce Avaya’s debt load through chapter 11, wipe out shareholders and, pending the completion of an internal investigation into controls over financial reporting, provide directors and executives with releases from potential litigation.

FTX founder Sam Bankman-Fried oversaw one of the biggest financial frauds in American history, a top federal prosecutor said in charging that the former chief executive stole billions of dollars from the crypto exchange’s customers while misleading investors and lenders. An indictment by the U.S. attorney’s office for the Southern District of New York, unsealed Tuesday, charges Mr. Bankman-Fried with eight counts of fraud. Prosecutors allege that he took FTX.com customers’ money to pay the expenses and debts of Alameda Research, an affiliated trading firm. Mr. Bankman-Fried is charged as well with conspiring to defraud the U.S. and violate campaign-finance rules by making illegal political contributions.

☆ Carvana Creditors Criticize Management, Gird for a Fight
▼ + stars: | 2022-12-09 | by ( Ben Foldy | Alexander Saeedy | ) www.wsj.com time to read: 1 min

Investors in online used-car seller Carvana Co. say they are frustrated at how executives handled the company’s downturn and are anxious about being pushed aside in a restructuring that could potentially involve the chief executive’s father, the company’s biggest shareholder. Carvana soared in the pandemic and like other big winners of that time it vastly overestimated its growth potential. Carvana, though, loaded up on debt to fund the expansion, leaving it vulnerable to a downturn. Its shares are down 98% this year.

The collapse of cryptocurrency exchange FTX has opened a hornet’s nest of squabbles between foreign governments and its new U.S. chief executive, John J. Ray III . In Cyprus, the country’s securities regulator is complaining that Mr. Ray’s decision to place FTX in bankruptcy has stymied investigations and is preventing European customers from getting their money back. Officials in the Bahamas, where FTX moved its headquarters last year, are accusing Mr. Ray of making false statements and suggesting that his team is motivated by the prospects of earning hefty legal fees. In Turkey, authorities have seized the assets of FTX’s local subsidiary, an affront to Mr. Ray’s efforts to sweep FTX’s assets into the chapter 11 process in Delaware.

☆ TikTok Chief Touts Customer Data-Privacy Initiatives
▼ + stars: | 2022-12-01 | by ( Sarah E. Needleman | Alexander Saeedy | ) www.wsj.com time to read: 1 min

TikTok Chief Executive Shou Chew said the video-sharing platform is taking greater steps to keep user data secure and that it needs to invest more in protecting young people from getting exposed to harmful content. “We have very rigorous data-access protocols,” he said at the New York Times’s Dealbook Summit in New York on Wednesday, adding that TikTok, a unit of Beijing-based ByteDance Ltd., chose Oracle Corp. as its cloud-infrastructure provider because the company has strong security controls.

☆ Sam Bankman-Fried Denies Knowing Scale of Bad Alameda Bets
▼ + stars: | 2022-11-30 | by ( Alexander Saeedy | ) www.wsj.com time to read: 1 min

Sam Bankman-Fried said that he didn’t intend to commit any fraud or use customer funds to back leveraged bets that went wrong at Alameda Research, a crypto hedge fund attached to FTX that pushed the exchange to bankruptcy. “I didn’t knowingly commingle funds,” Mr. Bankman-Fried said via live stream at the DealBook Summit in New York on Wednesday. He also was surprised at the size of Alameda’s bets that went wrong, “which points to another failure of oversight on my part,” Mr. Bankman-Fried said.

☆ Global Poor Lose Services as Developing Countries Face Higher Debt Payments
▼ + stars: | 2022-11-29 | by ( Gabriele Steinhauser | Alexander Saeedy | ) www.wsj.com time to read: 1 min

Pakistani cities like Karachi suffered rolling power outages this summer after the government cut energy imports to preserve dollars for debt payments. Pakistan turns the power off for up to six hours a day across the country. Ghana’s government has frozen payments to contractors, stalling road construction and prompting schools to warn they may have to stop serving student lunches. El Salvador is limiting hospital services and programs for the elderly. Across much of the developing world, cash-strapped governments are having to cut spending and freeze investments so they can pay creditors, as the Federal Reserve’s interest-rate hikes drive up borrowing costs.

☆ FTX Lawyer Says ‘Substantial Amount’ of Crypto Firm’s Assets Stolen or Missing
▼ + stars: | 2022-11-22 | by ( Alexander Saeedy | Jonathan Randles | ) www.wsj.com time to read: 1 min

A “substantial amount” of failed crypto exchange FTX’s assets is missing and may have been stolen as a run on customer deposits and a liquidity crunch precipitated a crisis of leadership and led the firm to collapse, its lawyer said in court on Tuesday. “FTX was in the control of inexperienced and unsophisticated individuals, and some or all of them were compromised individuals,” said James Bromley, counsel to FTX’s new management, at its debut appearance at the Delaware bankruptcy court after the failed exchange filed for the largest-ever crypto bankruptcy case earlier this month.

☆ Sam Bankman-Fried Ran FTX Like a Personal Fiefdom, Lawyers Say
▼ + stars: | 2022-11-22 | by ( Alexander Saeedy | Jonathan Randles | ) www.wsj.com time to read: 1 min

A substantial amount of FTX’s assets are either missing or stolen, a lawyer for the failed crypto exchange said in court, vowing to cast a wide net to secure potentially billions of dollars in funds that passed through the firm he called the “personal fiefdom” of co-founder Sam Bankman-Fried. Tuesday’s hearing marked an inflection point for FTX’s bankruptcy case as its new leaders begin chasing down what assets they can salvage and trying to determine who might be responsible for the loss of customers’ money.

☆ FTX Says Substantial Amount of Crypto Assets Stolen or Missing
▼ + stars: | 2022-11-22 | by ( Alexander Saeedy | Jonathan Randles | ) www.wsj.com time to read: 1 min

☆ FTX Says ‘Substantial Amount’ of Crypto Assets Stolen or Missing
▼ + stars: | 2022-11-22 | by ( Alexander Saeedy | Jonathan Randles | ) www.wsj.com time to read: 1 min

A “substantial amount” of failed crypto exchange FTX’s assets are either missing or stolen, its lawyer said in court, as a run on customer deposits and a liquidity crunch precipitated a crisis of leadership and led the highflying firm to a rapid collapse. Lawyers for the new managers of FTX vowed at a bankruptcy-court hearing to cast a wide net to identify and secure potentially billions of dollars in funds that passed through FTX, which they called the “personal fiefdom” of its co-founder, Sam Bankman-Fried.

FTX is expected to make its debut appearance Tuesday in Delaware bankruptcy court, where its new management is expected to recount events leading up to the cryptocurrency platform’s sudden collapse and explain the steps it has since taken to secure customer funds and other assets. FTX’s lawyers are advancing an unprecedented chapter 11 case marked already by allegations of major failures against its former leadership and a budding jurisdictional dispute with the government of the Bahamas, where the firm’s inner circle ran its doomed crypto operation.

☆ FTX’s Fight With Bahamas Puts Customers’ Crypto in Limbo
▼ + stars: | 2022-11-19 | by ( Alexander Saeedy | Soma Biswas | ) www.wsj.com time to read: 1 min

The collapse of FTX has put its new management at odds with regulators in the Bahamas over who should control billions in sparsely documented cash and cryptocurrency assets that are presently out of customers’ reach. The Securities Commission of the Bahamas last week installed liquidators at the exchange’s Bahamas-based unit FTX Digital Markets Ltd. to recover its assets and deposits from other FTX entities after they ruled it was insolvent. Bahamas regulators said on Thursday they had swept the local subsidiary’s assets to a government-controlled wallet “for safekeeping” and to protect the interests of clients and creditors.

☆ FTX’s New CEO Faults Lax Oversight in Bankruptcy Filing
▼ + stars: | 2022-11-17 | by ( Alexander Saeedy | Soma Biswas | ) www.wsj.com time to read: 1 min

FTX’s new chief executive said lax controls over the company’s billions of cash and cryptocurrency assets under the leadership of Sam Bankman-Fried has left current management scrambling to establish just how much money the bankrupt crypto platform has today. The declaration made in a Delaware bankruptcy court on Thursday marks the first attempt by FTX’s new chief executive, appointed shortly before the company filed for bankruptcy, to explain what went wrong at the company. John J. Ray, who led the liquidation of Enron Corp.’s assets in the years after the company collapsed, took over as CEO last week and his first official act was to authorize the company’s bankruptcy filing, he said.

☆ FTX’s New CEO Says Lack of Oversight Helped Lead to Bankruptcy
▼ + stars: | 2022-11-17 | by ( Alexander Saeedy | Soma Biswas | ) www.wsj.com time to read: 1 min

FTX suffered a “complete failure of corporate controls” that culminated in an “unprecedented debacle,” its new chief executive officer said Thursday. John J. Ray , who has helped oversee some of the biggest bankruptcies ever, including Enron’s, said in a filing to federal bankruptcy court that he has never seen anything as bad in 40 years of restructuring firms.

FTX suffered a “complete failure of corporate controls” that culminated in an “unprecedented” debacle, its new chief executive said Thursday. John J. Ray , who has helped oversee some of the biggest bankruptcies ever, including Enron’s, said in a filing to federal bankruptcy court that he’s never seen anything as bad in 40 years of restructuring firms.

FTX’s fall into bankruptcy with a chapter 11 filing that offered few details about its creditors and assets indicates a rush by the cryptocurrency platform to seek legal protection shortly after it had disclosed a huge financing gap. FTX’s bankruptcy filing will put independent managers in charge and give them the power to investigate and potentially recover funds from founder Sam Bankman-Fried, who in recent days admitted to investors that customer funds were used for proprietary trading. Mr. Bankman-Fried also told investors...

☆ Carvana’s Earnings Crash Spurs Bond Selloff
▼ + stars: | 2022-11-09 | by ( Alexander Gladstone | Alexander Saeedy | ) www.wsj.com time to read: 1 min

Carvana Co. ’s bonds are touching all-time lows, spotlighting investors’ concerns about the used-car seller’s long-term trajectory as it burns cash and faces rising borrowing costs. Carvana’s long-term bonds have declined to distressed levels, with some now trading as low as 33 cents on the dollar on Wednesday, a sign that investors don’t believe they will be paid back in full. The yield on their 10.25% notes was over 30% as of Tuesday, according to MarketAxess , a sign that Carvana would struggle to borrow from bond markets presently.

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