OKX, one of the world’s largest cryptocurrency exchanges by trading volume, announced on March 29 that it will be turning over a total of $157 million in frozen assets belonging to collapsed crypto firms FTX and Alameda Research to the FTX bankruptcy team.
The company decided to return the funds in response to a motion filed by liquidators in the U.S. Bankruptcy Court for the Southern District of Delaware, where the FTX case is being heard.
The funds in question belonged to FTX’s affiliate and ex-hedge fund Alameda Research, which opened the account on OKX under the name of David Ratiney, a former employee of FTX.
FTX Transferred $150 Million to an Account Opened on OKX in the Name of a Former Employee
FTX, which was once the third-largest crypto exchange by trading volume, suffered a catastrophic collapse in November after it was revealed that the platform was siphoning customers’ assets to its sister firm to make speculative investments outside of its business.
It was found that both FTX and Alameda mismanaged approximately $10 billion worth of customer and investor funds. At its peak, the crypto firms were collectively worth $32 billion.
FTX and Alameda filed for Chapter 11 bankruptcy by the end of the month to save themselves and their executives, which include founder and former CEO Sam Bankman-Fried, COO Gary Wang, Director of Engineering Nishad Singh, and former Alameda CEO and Bankman-Fried’s girlfriend Caroline Ellison.
While the former was arrested by authorities in the Bahamas, where his crypto empire was headquartered and is currently on trial in the United States, the latter group plead guilty to their crimes in exchange for a shorter sentence and agreed to cooperate with prosecutors.
In the days following the FTX debacle, OKX conducted investigations of its own to determine whether it had any transactions related to the company on its platform.
After the exchange discovered assets and an account belonging to FTX, it immediately moved to freeze the account and safeguard the deposits. However, OKX never revealed which assets were held in the accounts.
Ratiney, under penalty of perjury, declared in a court filing that a trading account was opened on OKX in his name on November 10, 2022, a day before FTX declared bankruptcy. According to the former FTX employee, the account was opened in his name using his personally identifiable information but was controlled and used by Alameda Research LLC and its subsidiaries.
Alameda deposited digital assets worth $150 million in the account and also held one open swap position on the crypto platform that is currently worth approximately $2 million. Ratiney also declared that he has no claims or interest in the assets.
In a press release, OKX said that it welcomes the court motion and is committed to cooperating with FTX debtors and law enforcement officials “in the hope” that uncovered assets will eventually be returned to affected FTX users through the bankruptcy process.
FTX Bankruptcy Team is Recovering Company Assets to Pay Back Customers
The recovery is part of the FTX debtors’ efforts to locate the company’s assets, liquidate them, and return funds to customers. The bankruptcy team, led by current FTX CEO John Ray III, last week managed to recover $404 million from Bahamas-based hedge fund Modulu.
As part of the deal, Modulo agreed to give up its claim on $56 million stored at FTX in exchange for the bankruptcy team not taking any further action against the hedge fund’s management.
In December, soon after FTX Debtors took control of the company, it announced the recovery of more than $1 billion in customer assets, followed by the company’s lawyers revealing in court that they had recovered another $5 billion worth of assets in January.
Earlier this month, Alameda Research sued crypto asset manager Grayscale to get back at least $250 million deposited with the firm.
Bankman-Fried, who was well-known for lobbying politicians, had donated hundreds of thousands of dollars in customer funds to political campaigns and charities to buy influence. FTX Debtors has since urged recipients of the donations to return funds or face legal action.
Bankman-Fried is currently facing 12 criminal charges, including securities fraud, bank fraud, money laundering, and violations of political campaign financing laws. The former billionaire is out on a $250,000 bail and is under house arrest at his parent’s house in Palo Alto, California. If found guilty of his crimes, the conman faces more than 100 years in prison.