More than 100 interested parties want to buy part of the failed crypto exchange FTX.
Bankman-Fried currently faces up to 115 years in prison if found guilty of all eight counts against him by federal prosecutors, including wire fraud, but it is unlikely he will face the maximum possible sentence even if he is found guilty, say legal experts.
The co-founder of FTX pleaded not guilty to using $8 billion of customers’ money to fund luxury purchases and political donations.
Federal prosecutors accused him of “perpetuat[ing] a scheme to defraud customers of FTX by misappropriating billions of dollars of those customers’ funds.”
The Department of Justice said the CEO used customer funds for “his personal use to make investments and millions of dollars of political contributions to federal political candidates and committees and to repay billions of dollars in loans owed by Alameda Research, a cryptocurrency hedge fund also founded by the defendant.”
Financial Firms Circle the Corpse of FTX For Pickings
Although bankruptcy filings from December 2022 stated (pdf) that the four businesses up for sale “maintained segregated customer accounts,” Bankman-Fried was still able to use his clients’ money for illegal purposes.On Jan. 8, a document filed in the Delaware bankruptcy court noted that 117 parties had expressed interest in purchasing at least one entity owned by FTX, and that 59 confidentiality agreements were agreed upon, reported Business Insider.
None of the parties identities were disclosed in the the filing, according to Business Insider, but they allegedly include “various financial and strategic counterparties globally.”
The document reported that at least 50 parties were reportedly interested in buying LedgerX, an exchange platform purchased by FTX in October 2021. They are also looking at Embed, which was acquired as part of the plan to allow stock trading on FTX.
FTX Europe and FTX Japan are both up for sale, too, with around 40 interested parties willing to bid, said the document.
The debtors provided management presentations with “preliminary diligence materials” for Embed and LedgerX, but are still creating them for the FTX platforms, whose operations are suspended.
The filing showed that Embed, LedgerX, and FTX Europe maintained separate computer systems, while FTX Europe and FTX Japan had separate headquarters.
DOJ Shows Concerned About Loss of Evidence If Auction Proceeds
Although the auctions for FTX are set to begin on Feb. 27, the Department of Justice’s bankruptcy division, the United States Trustee, has objected to the procedure.The trustee appointed by the government said there was “serious cause for concern” regarding the potential loss of business records during the sale, which could hinder future investigations into alleged wrongdoing at the failed crypto firm.
“The sale of potentially valuable causes of action against the debtors’ directors, officers, and employees, or any other person or entity, should not be permitted until there has been a full and independent investigation into all persons and entities that may have been involved in any malfeasance, negligence, or other actionable conduct,” said the trustee, Andrew Vara, in a court filing.
A hearing is scheduled at the Delaware bankruptcy court on Jan. 11.
