Maximizing FTX Recoveries
Maximizing FTX Recoveries
Disclaimer
Limitations of Report
This report and the information contained herein (the “Report”) has been prepared solely for use by FTX Trading Ltd. (d.b.a. FTX.com), and
approximately 101 additional affiliated companies (together, the “Company”) based on instructions given by the Company to Sullivan & Cromwell
(“S&C”), Alvarez & Marsal North America, LLC (“A&M”) and Perella Weinberg Partners (“PWP” and together with S&C and A&M, the “Debtors’
Advisors”).
The limiting conditions, assumptions and disclaimers set forth herein are an integral part of this Report, must be reviewed in conjunction herewith,
and may not be modified or distributed separately.
The preliminary Information included herein reflects and/or is based upon financial and other information provided to the Debtors’ Advisors by the
Company, including management, staff, contract staff and other advisors of the Company, as well as other sources. The Debtors’ Advisors have
relied upon, and assumed, without independent verification, the accuracy and completeness of such information, and make no representation or
warranty as to the accuracy or completeness of, and otherwise assumes no liability with respect to, the Report or upon which the Report is based.
The Debtors’ Advisors are not responsible to any party, in any way, for any analysis contained in this Report or for the future financial or operational
performance of any recipient or any affiliated company.
In the event this Report contains or involves prospective financial or forward-looking information, this information was prepared by the Company’s
management and our work did not constitute an examination, compilation or agreed-upon procedures in accordance with standards established by
the American Institute of Certified Public Accountants, and the Debtors’ Advisors express no assurance of any kind on such information. Further,
the work involved did not include a detailed review of any transactions, and cannot be expected to identify errors, irregularities or illegal acts,
including fraud or defalcations that may exist. Accordingly, the Debtors’ Advisors cannot and do not express an opinion or any other form of
assurance on, and assumed no responsibility for, the accuracy or correctness of the historical information or the completeness and achievability of
the projected financial data, information and assessments upon which the Report is presented.
Further, any references to estimated ranges of collateral values or cash flow recoveries included in this Report are preliminary in nature, subject to
material change and not valuations of any kind. Rather, estimates have been necessary to include herein, and are based upon the limited financial
information as provided or made available by the Company, available market information and various assumptions and are provided for
informational purposes only. References to values of any cryptocurrencies or other digital assets are approximate and subject to material change.
It is expected that there will be differences between estimated and actual results, because events and circumstances frequently do not occur as
expected, and those differences may be material. Accordingly, no representation or warranty is made as to, and the Debtors’ Advisors take no
responsibility for, the achievability of any estimated recovery results described in this Report. Accordingly, the Debtors’ Advisors are not responsible
to any party, in any way, for the future financial or operational performance of any recipient of the Report or any affiliated company.
Further, this Report will be subject to further work, revisions and other factors which means that this version may be substantially different from any
final report or advice issued.
The Report does not constitute a recommendation as to what action, if any, any person should take with respect to any claims and/or securities, nor
does the Report constitute a recommendation regarding the accounting, tax, financial, legal or regulatory aspects of any proposed or possible
outcome of the Company’s restructuring.
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PRELIMINARY / SUBJECT TO MATERIAL CHANGE
Case 22-11068-JTD Doc 507-1 Filed 01/17/23 Page 4 of 21
The limiting conditions are integral to this preliminary
report and should be read in conjunction therewith
Disclaimer (cont’d)
No Third Party Reliance
This preliminary Report and any related informational updates are provided only in connection with the purpose of a public case update in respect of
which the services are being provided. In no event, regardless of whether consent has been provided, shall the Debtors’ Advisors assume any
responsibility, liability or duty of care to any claimholder, person or entity other than the Company (“Third Party”) to which any this preliminary
information is disclosed or otherwise made available. This Report does not necessarily take account of those matters or issues which might be of
relevance to any Third Parties and any Third Party is responsible for conducting its own investigation with respect to the Report and any related
transactions or activities. The Debtors’ Advisors make no representations or warranties, express or implied, to any Third Party on which any such
party may rely with respect to the Information, including without limitation, as to accuracy or completeness, the inclusion or omission of any facts or
information, or as to its suitability, sufficiency or appropriateness for the purposes of any such party.
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PRELIMINARY / SUBJECT TO MATERIAL CHANGE
Case 22-11068-JTD Doc 507-1 Filed 01/17/23 Page 5 of 21
The limiting conditions are integral to this preliminary
report and should be read in conjunction therewith
Executive Summary
FTX Debtors have made important progress in efforts to maximize recoveries for customers and other stakeholders
FTX Debtors have identified approximately $5.5 billion of liquid assets to date comprising:
$1.7 billion of cash
$3.5 billion of liquid cryptocurrency and FTT tokens
$0.3 billion of liquid securities
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PRELIMINARY / SUBJECT TO MATERIAL CHANGE
Case 22-11068-JTD Doc 507-1 Filed 01/17/23 Page 6 of 21
The limiting conditions are integral to this preliminary
report and should be read in conjunction therewith
RECOVERY TO CREDITORS
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PRELIMINARY / SUBJECT TO MATERIAL CHANGE
Case 22-11068-JTD Doc 507-1 Filed 01/17/23 Page 7 of 21
The limiting conditions are integral to this preliminary
report and should be read in conjunction therewith
Liquid Assets
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Case 22-11068-JTD Doc 507-1 Filed 01/17/23 Page 8 of 21
The limiting conditions are integral to this preliminary
report and should be read in conjunction therewith
Confirmed Cash
USD in Millions WRS Silo Alameda Silo Ventures Silo Dotcom Silo Total
Includes $128.4 million of primarily restricted Includes $153.2 million of primarily custodial
cash at LedgerX or other restricted cash at FTX Digital Markets
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PRELIMINARY / SUBJECT TO MATERIAL CHANGE
Case 22-11068-JTD Doc 507-1 Filed 01/17/23 Page 9 of 21
The limiting conditions are integral to this preliminary
report and should be read in conjunction therewith
Held in
$426
Bahamas
$1403
Hacked
$415
Crypto
Notes:
1. $3.5 billion of identified crypto assets excludes $415mm of hacked crypto.
2. Crypto assets are priced as of the Petition Date based on preliminary pricing information from the AWS environment, reflective of the FTX order book at that time.
3. ~$140mm of crypto held at FTX Japan is segregated in cold wallets 1:1 for Japan customers, some of which may be available to the Debtors.
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PRELIMINARY / SUBJECT TO MATERIAL CHANGE
Case 22-11068-JTD Doc 507-1 Filed 01/17/23 Page 10 of 21
The limiting conditions are integral to this preliminary
report and should be read in conjunction therewith
Crypto tracing achieved by analyzing database of 14mm addresses & 3rd party exchanges1,2,3
USD in Millions
$3
$121
$181
$1,637
Hot Wallet Crypto
$1,761
$1,612
$88
$742
$1,271
$268 $245
$90 $67
$42 $39 $35 $31 $29
Mixed
SOL FTT BTC ETH APT DOGE MATIC BIT TON XRP Stablecoins
Notes:
1. Excludes ~$140mm of crypto held at FTX Japan is segregated in cold wallets 1:1 for Japan customers, some of which may be available to the Debtors.
2. Crypto assets are priced as of the Petition Date based on preliminary pricing information from the AWS environment, reflective of the FTX order book at that time.
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PRELIMINARY / SUBJECT TO MATERIAL CHANGE
Case 22-11068-JTD Doc 507-1 Filed 01/17/23 Page 12 of 21
The limiting conditions are integral to this preliminary
report and should be read in conjunction therewith
Illiquid tokens1,2 are not included in located crypto value estimates as of Petition Date
USD in Millions
Petition Date USD Equivalent Petition Date USD Equivalent
No. Logo Token Quantity Spot Price at Spot Price No. Logo Token Quantity Spot Price at Spot Price
LUNA
3 MAPS 9,870,251,766 $0.053 $521 13 6,951,539 $1.690 $12
(Wormhole)
The listed top 20 tokens compose 98% of the illiquid value while the remaining ~200 tokens make up the rest
Notes:
1. Illiquid tokens reflect certain tokens whereby the market cap and volume is low, or where FTX holds a significant portion of the coins in circulation, whereby attempts to liquidate would significantly affect their
market value.
2. Crypto assets are priced as of the Petition Date based on preliminary pricing information from the AWS environment, reflective of the FTX order book around that time. 11
PRELIMINARY / SUBJECT TO MATERIAL CHANGE
Case 22-11068-JTD Doc 507-1 Filed 01/17/23 Page 13 of 21
The limiting conditions are integral to this preliminary
report and should be read in conjunction therewith
Brokerage Assets
$4 Million Across
Ethereum Classic ETF
Litecoin Trust ETF
Digital Large Cap ETF
$197 Million
Grayscale Bitcoin Trust ETF 74%
3.2% of Total Shares
<$0.1 Million
BlackRock Equity
Venture Investments
/
Token
Four wholly owned subsidiaries covered by Bid Procedures Order entered January 12, 2023
Description
Registered in Japan;
Licensing
Primary
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Case 22-11068-JTD Doc 507-1 Filed 01/17/23 Page 16 of 21
The limiting conditions are integral to this preliminary
report and should be read in conjunction therewith
Official Committee of
Unsecured Creditors
Joint Provisional Liquidator Debtors
+ +
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Case 22-11068-JTD Doc 507-1 Filed 01/17/23 Page 17 of 21
The limiting conditions are integral to this preliminary
report and should be read in conjunction therewith
Nassau
D
B A
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Case 22-11068-JTD Doc 507-1 Filed 01/17/23 Page 18 of 21
The limiting conditions are integral to this preliminary
report and should be read in conjunction therewith
The Debtors are reviewing all historical transactions conducted by prepetition management
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Political Donations
$93 million of donations between
March 2020 and November 2022
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PRELIMINARY / SUBJECT TO MATERIAL CHANGE
Case 22-11068-JTD Doc 507-1 Filed 01/17/23 Page 19 of 21
The limiting conditions are integral to this preliminary
report and should be read in conjunction therewith
Alameda Research had the ability to borrow without collateral up to $65B from customers
Exempt from
Exchange
Auto-Liquidation
Auto-Liquidation
Customers can trade on margin
only up to posted collateral
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PRELIMINARY / SUBJECT TO MATERIAL CHANGE
Case 22-11068-JTD Doc 507-1 Filed 01/17/23 Page 20 of 21
The limiting conditions are integral to this preliminary
report and should be read in conjunction therewith
Alameda Research and small group of individuals had ability to remove assets from exchange
Account Setting Code Implications Number of Accounts
Customers
Credit Limit
User can have a negative balance up to a
specified credit limit. Primarily used for market $1 Million to $150 Million 41
makers to receive lending from FTX.
$65 Billion 1
“Off AWS Ledger” by moving funds through a direct on-chain transaction Small group of individuals
User can move assets (crypto) by accessing
the private keys to initiate a direct on-chain All Crypto 1
transaction.3
Notes:
1. The exchange code assessment above was based on a review of the FTX codebase and conversations with post-petition FTX employees. For the FTX US platform,
preliminary analysis shows that 3 accounts had “borrow > zero”, notably Alameda for $150mm. The FTX US platform had the same “off ledger” issue, and preliminary analysis
shows that it had a similar “on ledger” issue that is under review.
2. The FTX codebase reflects that an “allow_negative” function may also enable this ability, however it only applies to 10 internal FTX/Alameda trading accounts. 19
3. Certain users had permissions in the AWS environment to access private keys. Investigation is underway to determine whether any off-ledger misuse of such access occurred.
PRELIMINARY / SUBJECT TO MATERIAL CHANGE
Case 22-11068-JTD Doc 507-1 Filed 01/17/23 Page 21 of 21
The limiting conditions are integral to this preliminary
report and should be read in conjunction therewith
AWS Environment
Certain individuals could withdraw assets without record on the exchange ledger1
FTX.US Order Book Outside of AWS
& Matching Engine
Sweep Addresses
FTX.US Pooled Funds
Crypto
Crypto