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SBF says latest revelation is “misleading” about FTX.US solvency

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SBF says latest revelation is “misleading” about FTX.US solvency

SBF says latest revelation is “misleading” about FTX.US solvency Oluwapelumi Adejumo · 7 hours ago · 1 min read

FTX management was making a “meaningless comparison” by not including the bank balances as part of the bankrupt’s firm assets, said SBF.

1 min read

Updated: January 18, 2023 at 7:54 am

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Cover art/illustration via CryptoSlate

FTX founder Sam Bankman-Fried (SBF) said on Jan. 17 that FTX.US was solvent, adding that customers should be given access to their funds.

SBF was reacting to new revelations made by the FTX management about the shortfalls in the U.S. subsidiary.

The claims are “misleading” because it does not consider the $428 million in the exchange’s bank accounts as an asset, according to SBF. He argued that FTX.US has at least $111 million and roughly $400 million excess cash to match customer balances.

SBF said in his substack report that the management did not define the kind of assets they found to be “substantially less,” nor did they specify if the customer balances included non-USD balances.

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For context, SBF said FTX.US Derivatives (LedgerX) had $250 million in a segregated bank account meant for its regulatory capital push. The funds in the bank account surpass the $181 million the management said they had found as of the petition date, according to SBF.

The FTX management was making a “meaningless comparison” by not including the bank balances as part of the bankrupt’s firm assets.

SBF concluded:

“S&C claims that FTX US has a shortfall. That claim is false. Based on S&C’s own data provided in the same court presentation, FTX US had roughly $609m of assets ($428m USD in bank accounts, plus $181m of tokens) backing roughly $199m of customer balances. FTX US was solvent when it was turned over to S&C, and almost certainly remains solvent today.”

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Bankruptcy

SBF tried to meet FTX replacement CEO John Ray

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SBF tried to meet FTX replacement CEO John Ray

SBF tried to meet FTX replacement CEO John Ray Mike Dalton · 4 seconds ago · 2 min read

Sam Bankman-Fried wanted to connect in NYC. John Ray III didn’t respond.

2 min read

Updated: January 30, 2023 at 10:31 pm

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Cover art/illustration via CryptoSlate

Disgraced FTX CEO Sam Bankman-Fried attempted to meet with the firm’s replacement bankruptcy CEO John Ray III, according to a court filing dated Jan. 30.

That filing disclosed a private message from Bankman-Fried, who contacted Ray on Dec. 30. Bankman-Fried wanted to discuss funds that were being withdrawn from Alameda Research wallets, as reported by various sources at that time.

Bankman-Fried asserted that he had no access to those funds. He warned that a hacker could be responsible if Ray’s own team was not behind the transfer, writing:

“I’ve seen these reports…if this is your team moving the assets to custody, great! If not, I worry it might be a hacker — possibly the same one as a month and a half ago.”

Days later, on Jan. 2, Bankman-Fried followed up on that message by asking John Ray III to meet in New York City. That message, in part, read:

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 “I know things haven’t gotten off on the right foot but I really do want to be helpful… I’m in NYC for the next day. I’d love to meet up while I’m here even if just to say hi.”

Bankman-Fried also contacted an unnamed witness earlier this month, as previously reported. That witness is believed to be FTX US General Counsel Ryne Miller. Neither Ray nor Miller responded to Bankman-Fried’s original messages.

Government prosecutors submitted the relevant messages as part of an attempt to restrict Bankman-Fried’s communications. Prosecutors are concerned that Bankman-Fried could affect witnesses in his criminal case through private conversations. As such, prosecutors aim to prevent Bankman-Fried from using encrypted or self-deleting messaging apps and prevent him from contacting current and former FTX associates.

However, prosecutors did not submit the relevant conversations immediately after making that request on Jan. 27. Judge Lewis Kaplan asked for the prosecutors to submit conversation transcripts by today, Jan. 30, before proceeding. As of Monday afternoon, the judge has not made a decision on whether to impose the communications ban.

Though Bankman-Fried is able to speak publicly and privately, his decision to do so goes against the advice of his lawyers and could harm his defense.

Ray himself has previously complained about Bankman-Fried’s willingness to talk, calling his statements “erratic and misleading” in relation to FTX’s separate bankruptcy case.

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BlockFi permitted to auction mining equipment

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BlockFi permitted to auction mining equipment

BlockFi permitted to auction mining equipment Mike Dalton · 2 hours ago · 1 min read

Courts have determined that the bankrupt crypto lender can sell specific assets.

1 min read

Updated: January 30, 2023 at 9:03 pm

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Cover art/illustration via CryptoSlate

BlockFi has gained permission in bankruptcy court to sell its cryptocurrency mining equipment, Bloomberg reported  Jan. 30.

Bloomberg cited statements made by BlockFi representatives during a video hearing today.
The company’s lawyer, Francis Petrie, said:

“We’ve received substantial interest in the market for bidding purposes and current volatility in the cryptocurrency market, which means we need to act quickly.

Petrie said the bidding period for BlockFi’s mining equipment will conclude on Feb. 20. The auction will begin one week later, and any deal that results from the process will be approved in March. The company has reportedly received initial bids already.

BlockFi intends open bidding as soon as possible in order to capitalize on the cryptocurrency market’s recent gains.

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Reports from Bloomberg last week suggest that BlockFi plans to sell $160 million of loans backed by 68,000 mining machines — as opposed to the equipment itself. This sale appears to be a separate auction, as its bidding deadline ended Jan. 24.

BlockFi could sell other assets in order to recover from insolvency, though no detailed plans have been announced in that regard to date. Any assets that BlockFi does not auction will be used in the firm’s restructuring process, Petrie said.

BlockFi is not the only bankrupt company to auction its mining business. Celsius entered an agreement to sell 2,687 mining rigs for $1.34 million this month — and the firm has several thousand other devices that it could potentially auction off.

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BlockFi permitted to pay $10M in staff bonuses in spite of bankruptcy

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BlockFi permitted to pay $10M in staff bonuses in spite of bankruptcy

BlockFi permitted to pay $10M in staff bonuses in spite of bankruptcy Mike Dalton · 6 hours ago · 1 min read

The firm retains about 125 employees, according to earlier reports.

1 min read

Updated: January 27, 2023 at 10:35 pm

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Cover art/illustration via CryptoSlate

Bankrupt crypto lending firm BlockFi has been granted court permission to pay nearly $10 million in staff bonuses, according to a filing dated Jan. 27.

The filing does not use the word “bonus” itself. Instead, it refers to an employee retention program and describes additional payments on top of base salaries.

The program will see BlockFi pay up to $9.98 million to a few remaining employees. That amount will be distributed to employees in three installments. There will be two tiers of payment: one which pays employees 42.5% of their base salary amount and one which pays employees 9% of their base salary amount.

Today’s filing additionally notes that BlockFi has been “authorized, but not directed,” to enact this employee retention program. Though the firm will seemingly not be required to pay all or any of its employees, it will need to complete the last of the three payouts within 12 months of court approval if it chooses to proceed with the retention plan.

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The court filing did not state how many employees are eligible for the bonus. However, recent reports suggest that the firm has about 125 employees at present.

BlockFi initially justified its request by stating that its employees would likely be hired elsewhere due to aggressive competition. Statements from BlockFi’s legal representation suggest that the firm’s employees play a critical role in returning assets to investors.

BlockFi’s decision to pay its staff will undoubtedly be controversial because it has not yet fully reopened customer withdrawals. In December, the company began to take steps in court to reopen essential wallet withdrawals while leaving interest-bearing wallets closed. Regardless, all wallets appear to remain frozen as of Jan. 27.

BlockFi’s bankruptcy proceedings are in the U.S. Bankruptcy Court for the District of New Jersey. Judge Michael Kaplan is overseeing the case.

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