Summary

• FTX has recovered $5 billion in liquid assets, attorneys announced in bankruptcy court.
• Federal prosecutors plan to seize $500 million in FTX-connected assets.
• The collapse of FTX was caused by failure to mark illiquid assets and executives borrowing against the token value.

Attorneys in a Delaware bankruptcy court announced during an FTX bankruptcy hearing on Wednesday that the crypto exchange has recovered over $5 billion worth of liquid assets, including cash and digital assets.

This news follows the announcement by federal prosecutors that they plan to seize at least $500 million worth of FTX-connected assets as part of their ongoing prosecution of FTX co-founder Sam Bankman-Fried. The recovery is a positive development for FTX customers, who have been affected by the company's collapse in November.

FTX's new CEO, John J. Ray, previously stated that at least $8 billion of customer assets were unaccounted for in what he called the "worst" case of corporate control he had ever seen. It's worth noting that the $5 billion figure does not include any illiquid cryptocurrency assets.

FTX attorney Adam Landis told the court that the company's holdings are so large that selling them would significantly affect the market and decrease their value. The collapse of FTX was due to multiple factors, including a failure to correctly mark illiquid assets to market.

FTX executives, including Bankman-Fried and Alameda Research CEO Caroline Ellison, borrowed against the value of the FTX-issued token FTT. Alameda controlled the vast majority of FTT coins in circulation, similar to a publicly traded companies' float, and were not able to liquidate their position at full book value.