FTX assets missing, stolen;  But Bitcoin's $1 Million Goal Is Still in Play

FTX assets missing, stolen; But Bitcoin’s $1 Million Goal Is Still in Play

FTX’s bankruptcy team is struggling to track down all of the cryptocurrency exchange’s assets after it collapsed and filed for Chapter 11 on Nov. 11. Wall Street Journal reported.


The company’s new management is trying to track down and recoup at least some of the billions of dollars that flowed through FTX and sister trading company Alameda Research.

Inexperienced, unsophisticated, compromised

“What we have here is a global, international organization, but one that was run as a personal fiefdom of (co-founder and former CEO) Sam Bankman-Fried,” FTX attorney James Bromley told a court on Tuesday. Delaware bankruptcy court. “FTX was under the control of inexperienced and unsophisticated individuals, and some or all of them were compromised.”

Bromley described the fall of FTX as “one of the sharpest and most difficult collapses in the history of American companies and in the history of companies around the world”.

FTX has attracted millions of retail and institutional clients. Lawyers do not know if the recoverable assets will be sufficient to meet the obligations. Court documents show the 50 largest creditors owe more than $3 billion. FTX’s team said it would take months to sort through customer complaints and Alameda’s risky trades. Meanwhile, customer funds on the exchange remain frozen.

And in further testimony to SBF’s mismanagement, court documents revealed last week that one of FTX’s units spent $300 million in corporate funds on homes in the Bahamas for former top executives and Bankman-Fried’s parents.

Now new CEO John J. Ray III, who oversaw Enron’s bankruptcy liquidation, is tasked with recovering whatever funds he can for investors and customers. It could be his toughest test yet. “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of reliable financial information,” he previously said.

Beyond FTX: Testing Bitcoin in Battle

But while Bankman-Fried seems to have flown too close to the sun, Cathie Wood still believes Bitcoin is going to the moon.

Wood, founder and CEO of ARK Investment Management, is maintaining her Bitcoin price target of $1 million per coin by 2030, she told Bloomberg Businessweek on Tuesday evening. Even as the world’s largest crypto hit its lowest level in two years on Monday.

“Sometimes you have to do combat testing. You have to go through crises to see the survivors, test the infrastructure and the thesis. We think Bitcoin comes out of this smelling like a rose,” Wood said.

“If you look at blockchain…the infrastructure, the technology hasn’t moved through this crisis,” she said. Wood says Bitcoin’s hash rate at an all-time high is a testament to security. And the total value of Ethereum is at an all-time high of $24 billion.

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Ark invests

Wood puts his money where his mouth is, grabbing battered stocks from Coinbase (COIN) shares and Grayscale Bitcoin Trust (GBTC).

The Ark Next Generation Internet ETF (ARKW) and ARK Innovation ETF (ARKK), combined, bought nearly 177,000 shares of GBTC for a value of $1.5 million on Monday. This is after ARKW bought more than 315,000 shares of GBTC worth around $2.8 million last Monday, Bloomberg reported.

Since Nov. 9, the two funds have purchased about 1.3 million COIN shares, worth $56 million based on Tuesday’s closing price, bringing its total holdings to 8.37 million. of shares.

“I think Coinbase is going to come out of this very strong, they just lost a very big competitor in FTX,” Wood said in the Bloomberg interview.

Current Coinbase stock prices are likely down due to fear and a lack of understanding of crypto, she said. Still, the crypto is unlikely to face a “Lehman moment” as the scale is much smaller. And while the FTX situation “was a fraud,” Wood predicted that the claims would ultimately be far lower than those of the Bernie Madoff scandal.

Meanwhile, decentralized finance platforms, which use secure, distributed ledgers similar to cryptocurrencies, are poised to take off due to their increased transparency and reduced counterparty risk, Wood said.

COIN and GBTC now make up ARK’s 14th and 41st largest holdings, across all of its funds, according to the company’s latest data.

Bitcoin rose above $16,500 on Wednesday afternoon. COIN stock was up another 5% at market close after jumping 5.2% on Tuesday. And GBTC stock jumped 9.3% after gaining 2% on Tuesday.

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