NEW YORK (AP) — The company tasked with locking up the assets of failed cryptocurrency exchange FTX says it has managed to recover and secure $740 million in assets so far, a fraction of the potentially billions of dollars likely missing from the company’s coffers .
The figures were revealed Wednesday in court documents from FTX, which hired cryptocurrency custody company BitGo hours after FTX filed for bankruptcy on Nov. 11.
The biggest worry for many of FTX’s customers is that they will never see their money again. FTX failed because founder and former CEO Sam Bankman-Fried and his lieutenants used client funds to invest in FTX’s closely related trading firm, Alameda Research. Bankman-Fried was reportedly seeking over $8 billion from new investors to repair the company’s balance sheet.
Bankman-Fried “proved that there is no such thing as a ‘safe’ conflict of interest,” BitGo CEO Mike Belshe said in an email.
The figure of 740 million dollars is from 16 November. BitGo estimates that the amount of recovered and secured assets is likely to have risen above $1 billion since that date.
The assets recovered by BitGo are now locked in South Dakota in what is known as “cold storage,” meaning they are cryptocurrencies stored on hard drives that are not connected to the internet. BitGo offers what are known as “qualified custodial services” under South Dakota law. It’s basically the crypto equivalent of a financial custodian, offering segregated accounts and other security services to lock digital assets.
Several crypto companies have failed this year as bitcoin and other digital currencies have collapsed in value. FTX failed in what was perceived as the crypto equivalent of a bank run, and early investigations have found that FTX employees were commingling assets held for clients with assets they invested.
“Trade, financing and custody must be different,” Belshe said.
The assets recovered include not only bitcoin and ethereum, but also a collection of smaller cryptocurrencies that vary in popularity and value, such as the shiba inu coin.
California-based BitGo has a history of recovering and securing assets. The company was tasked with securing assets after cryptocurrency exchange Mt. Gox failed in 2014. It is also the custodian of the assets held by the government of El Salvador as part of the country’s experiment in using bitcoin as legal tender.
FTX pays Bitgo $5 million and $100,000 a month for its services.