Lawyers representing the collapsed cryptocurrency exchange, FTX, have said that a “substantial amount of assets have either been stolen or are missing” at a bankruptcy hearing in federal court in Delaware.

The Digital Currency Group (DCG) has revealed in a letter to investors that it has $2 billion of liabilities, including a $575 million loan from Genesis Global Capital, its own subsidiary. The group has a $350 million credit facility from a group of lenders led by Eldridge Industries, and a $1.1 billion promissory note connected to the collapse of Three Arrows Capital.

Coinbase’s 2022 Digital Assets Outlook Survey has shown that 62% of investors who are currently invested in the cryptocurrency space increased their allocations over the past 12 months, compared to 12% who decreased allocations.

Top stories in the Crypto Roundup today:

• FTX Says ‘Substantial’ Portion of Assets are Missing
• Digital Currency Group Reveals $2 Billion of Liabilities
• Coinbase Survey: 62% of Crypto Investors Increased Allocations Over Past 12 Months
• Spot Trading Volume Drops Following FTX’s Bankruptcy

FTX Says ‘Substantial’ Portion of Assets are Missing

 

Lawyers representing the collapsed cryptocurrency exchange FTX have said that a “substantial amount of assets have either been stolen or are missing” at a bankruptcy hearing in federal court in Delaware.

The exchange filed for bankruptcy earlier this month after a bank run left it owing $8 billion and revealed it did not hold users’ funds properly. Its collapse sparked investigations by the U.S. Securities and Exchange Commission (SEC) and the Justice Department on whether it misappropriated customer funds via loans to Alameda Research, its sister company.

FTX’s downfall has left retail investors and major firms scrambling to recover billions that had been deposited on its platform. The bankruptcy process will determine how much of the deposited funds can be retrieved.

James Bromley, a partner at the law firm Sullivan & Cromwell who is representing FTX, said at the hearing that former CEO Sam Bankman-Fried’s poor management has left lawyers with limited information on the firm’s finances.

Per his words, assets are missing after FTX faced “cyberattacks,” referring to what appears to have been a hack on the exchange the day it filed for bankruptcy. The hacker has since sold off the stolen funds to ETH, which were then converted to renBTC, a tokenized BTC token connected to Alameda.

Digital Currency Group Reveals $2 Billion of Liabilities

The Digital Currency Group (DCG) has revealed in a letter to investors that it has $2 billion of liabilities, including a $575 million loan from Genesis Global Capital, its own subsidiary. The group has a $350 million credit facility from a group of lenders led by Eldridge Industries, and a $1.1 billion promissory note connected to the collapse of Three Arrows Capital.

In its letter to shareholders, the group’s CEO, Barry Silbert, outlined the state of the company’s lending situation. The letter reveals that Genesis lent more than half a million dollars to DCG itself, with the loan being due May 2023.

Silbert noted that the loans were made “in the ordinary course of business” and concluded DCG borrowed funds from Genesis “in the same vein as hundreds of crypto investment firms.” The CEO also said the $1.1 billion promissory note is due in June 2032, as DCG “stepped in and assumed certain liabilities from Genesis.”

In the letter, Silbert wrote that the group has “weathered previous crypto winters” and will “come out stronger” from the current market downturn.

Coinbase Survey: 62% of Crypto Investors Increased Allocations Over Past 12 Months

Coinbase’s 2022 Digital Assets Outlook Survey has shown that 62% of investors who are currently invested in the cryptocurrency space increased their allocations over the past 12 months, compared to 12% who decreased allocations.

The exchange wrote:

"This is evidence that institutional investors have continued to take a long-term view of the asset class even as prices have fallen. Looking ahead, 58% of investors expect to increase their allocations over the next three years.”

About 59% of investors are currently using or plan on using a buy-and-hold approach. The survey interviewed 140 institutional investors and was conducted prior to the collapse of FTX.

Spot Trading Volume Drops Following FTX’s Bankruptcy

On the days following FTX’s bankruptcy, spot trading volume on centralized exchanges plunged after hitting record lows throughout the month of October. The loss of trust in centralized exchanges, combined with the grim price action of crypto markets, implies we’ll likely see similar activity in the coming months.

Gate.io and Crypto.com both saw a slight increase in activity, as rumors on social media raised concerns regarding their solvency. Both disregarded allegations of a liquidity crunch and revealed their Proof of Reserves to add credibility.

Read more on CryptoCompare’s October 2022 Exchange Review report.

State of the Crypto by Top Tier Exchange Volume

Build your project with CoinDesk Data

Terms | Privacy

13 Charles II St, SW1Y 4QU

London, UK

This email may include advertisements by third parties. None of the advertised or promoted products and services have been verified or approved by us and this email is not any endorsement by us of the third party or of their products or services.