A small hedge fund is the most recent target of liquidators searching for FTX’s missing funds.
Key Details
- The hunt to find and restore FTX’s lost funds continues, with bankruptcy lawyers and financial regulators continuing to work together to untangle the mess of one of the former largest crypto exchanges in the world.
- The newest word is that FTX’s lawyers are negotiating with the founders of a small hedge fund called Modulo Capital for $400 million that has been sitting in a JPMorgan Chase account since the collapse, according to The New York Times.
- The liquidators are aggressively attempting to recover lost funds. They are continuing their search for more than $8 billion in missing assets.
- They recently revealed $5.5 billion in assets discovered in various parts of the company and chasing $4.6 billion tied up on various companies invested in by FTX.
- They’re also requesting political donations and insider payments to other exchanges to be returned to FTX.
Why It’s Important
The collapse of FTX in November 2022 has become one of the most significant financial disasters in history, standing alongside the collapses of Enron, Fruit of the Loom, and Penn Central in terms of the scale and impact of what it left behind. Bankruptcy lawyer John J. Ray III called FTX one of the worst-managed financial institutions he’s ever seen.
The crash destroyed confidence in the crypto economy. It caused a market crash that destroyed the value of major currencies for months, subsequently resulting in legislative proposals from the federal government to crack down on crypto.
Sam Bankman-Fried (SBF) was arrested in his Bahamas home on December 12, extradited to the U.S., and pleaded innocent to fraud charges on January 3, 2023. He is expected to face trial later this year. Several of his colleagues have agreed to immunity deals in exchange for collaborating with federal authorities.
SBF reportedly invested the money into the firm shortly before the collapse of FTX. Modulo Capital has not been formally charged or accused of wrongdoing as of yet. However, The New York Times notes that the firm’s founders are seeking legal immunity in exchange for returning the money they received from FTX.
Modulo Capital was founded in the Bahamas by former Jane Street traders Duncan Rheingans-Yoo and Xiaoyun Zhang, CryptoSlate notes.
