In a bankruptcy hearing, FTX lawyers say a “substantial amount” of assets have been stolen from accounts; client names and addresses will be redacted for now
Crypto is the cat with nine lives, but some wonder if FTX might be the last one. CNBC : FTX lawyer calls this case ‘a different sort of animal’ in first bankruptcy hearing Panda Security Mediacenter : Hackers stole hundreds of millions from crypto exchange FTX Timmy Shen / Forkast : At FTX's first bankruptcy hearing, lawyer calls out ‘substantial amount’ of missing, stolen assets Ibukun Ogundare / Coinspeaker : Bankruptcy Counsel Reveals FTX Assets at Risk of Cyberattacks Hassan Maishera / CoinJournal : FTX was run as a ‘personal fiefdom’ of Bankman-Fried, says company lawyers Tweets: Jacquelyn Melinek / @jacqmelinek : Timeline of the FTX collapse, presented during the first day hearing at the U.S. Bankruptcy Court “At 4:30 am on November 11th, Mr. Bankman-Fried resigned,” James Bromley, partner at Sullivan and Cromwell said. https://twitter.com/... Tyler Reynolds / @tbr90 : In 5 days we've gone from FTX executives being “potentially compromised” to “some or all compromised” And given how the MSM has framed this as “mismanagement” when it is clearly fraud & theft means that this rabbit hole goes quite deep https://twitter.com/... @reuters : FTX was run as a ‘personal fiefdom’ of former CEO Sam Bankman-Fried, attorneys for the collapsed crypto exchange said in its first bankruptcy hearing, as they detailed ongoing challenges such as hacks and substantial missing assets https://www.reuters.com/... https://twitter.com/... Ryan Browne / @ryan_browne_ : Some top lines from FTX's lawyer in the bankruptcy hearing so far: - FTX was run as the “personal fiefdom” of SBF - A “substantial amount” of assets have been either stolen or are missing - $300 million was spent by FTX on real estate in the Bahamas https://www.cnbc.com/... @alexqgb : Effective Selfishness (until suddenly it isn't) https://twitter.com/... @kadhim : FTX attorney Bromley says “substantial funds” were transferred to Alameda from FTX and other parts of SBF's empire. “One of the US debtors ... purchased almost $300mn worth of real estate in the Bahamas.” Most of those properties were execs' homes/vacation properties, he says @tree_of_alpha : FTX CONTINUES TO SUFFER CYBERATTACKS AS BANKRUPTCY BEGINS, “SUBSTANTIAL” ASSETS ARE MISSING - FTX ATTORNEY Lawyer slang for “y'all are definitely not getting a cent out of this”. David Gura / @davidgura : We have learned in U.S. Bankruptcy Court, from one of the FTX Debtors' attorneys, that in January 2022, the value of FTX's U.S. and international businesses was $40 billion. (The U.S. business was valued at $8 billion, and the international business was valued at $32 billion.) Nikhilesh De / @nikhileshde : “Your Honor, what we have is a worldwide organization, but an organization that was run effectively as a personal fiefdom of Sam Bankman-Fried,” says Sullivan Cromwell attorney #FTXbankruptcy https://twitter.com/... @tier10k : [DB] FTX Bankruptcy: Judge Will Allow Redaction of Customer Names and Addresses on an Interim Basis David Gura / @davidgura : FTX “was run as a personal fiefdom of Sam Bankman-Fried,” Sullivan and Cromwell's James Bromley tells the U.S. Bankruptcy Court, noting that there was “a lack of corporate controls at a level that none of us in the profession that have looked at it so far have ever seen.” Alex Thorn / @intangiblecoins : *judge in FTX bankruptcy rules in favor of debtors (FTX) to keep all unsecured creditor information redacted for now this means we will not have immediate ability to further assess contagion David Gura / @davidgura : Sullivan and Cromwell's Brian Glueckstein, representing the FTX Debtors, tells the U.S. Bankruptcy Court he “anticipates millions of creditors in these Chapter 11 cases.” David Gura / @davidgura : Bedlam on the U.S. Bankruptcy Court Zoom call of the FTX “first day” hearing... During a ten-minute recess, some of the 500+ participants are intermittently playing music, saying they want their money back, etc. Ryan Browne / @ryan_browne_ : FTX's lawyers anticipate there are “millions” of customers owed money by the firm. They've been granted a motion by the judge to withhold client information (for now), which they said would infringe on privacy if published. Mark Ames / @markamesexiled : 🔥"It is not clear who had the authority to hire Sullivan & Cromwell for the FTX bankruptcy case or who had the authority to hire the new FTX CEO, John Ray III. The pleadings in the case thus far fail to indicate who it was that hired them." https://wallstreetonparade.com/ ... @tier10k : Someone is playing Sorry by Justin Bieber on the FTX bankruptcy hearing zoom Ben Myers / @blevimyers : Excerpt: He said the company had faced “cyber attacks,” and that assets were still missing. He appeared to be referring to the sudden movement of hundreds of millions of dollars in FTX assets in unauthorized transactions on the day the company filed for bankruptcy. https://twitter.com/... Eric Balchunas / @ericbalchunas : Can we stop saying “allegedly” now? A “substantial amount” of FTX Group's assets “have either been stolen or are missing,” an attorney representing the firm told a bankruptcy court https://www.bloomberg.com/... via @business Akiko Fujita / @akikofujita : “We have probably witnessed one of the most abrupt and difficult corporate collapses in the history of corporate America.” Good roundup from @DsHollers on day one of bankruptcy hearings for #FTX https://finance.yahoo.com/... Ken Sweet / @kensweet : NEW YORK (AP) — Lawyers for FTX disclosed Tuesday that a “substantial amount” of assets has been stolen from the accounts of the collapsed cryptocurrency exchange, diminishing the odds that its millions of investors will get their money back. https://apnews.com/... Tom Bevan / @tombevanrcp : Turns out the report that FTX spent $121 million on real estate in the Bahamas - including a $16 million home for SBF's parents - was off by about $180 million. https://www.cnbc.com/... https://twitter.com/...
Context & Ripple Effects
The hearing adds an asset-security problem to an already large creditor case: filings two days earlier put the claims of FTX’s 50 biggest unsecured creditors at $3.1 billion. It also follows reports that the SEC and CFTC were examining FTX’s handling of customer funds and its links to the rest of Bankman-Fried’s businesses.
First-order effects
- FTX’s bankruptcy estate must preserve and trace remaining assets while responding to continuing cyberattacks, making recoverable balances less certain for its millions of anticipated customer-creditors.
- The court’s interim redaction protects FTX customers’ names and addresses during the case, limiting public access to creditor identities while asset claims are assembled.
Second-order effects
- Large unsecured creditors face a more contested recovery process as missing or stolen assets reduce the pool available to satisfy claims.
- The reports of asset transfers to Alameda make the SEC and CFTC’s inquiry into customer-fund handling more consequential, because tracing funds across affiliated entities becomes central to both the bankruptcy and regulatory scrutiny.
Third-order effects
- Later accounts of FTX’s recordkeeping and key-management failures suggest that crypto insolvencies will increasingly turn on whether platforms can demonstrate custody controls and reliable internal records, not merely reported balances.
- If redaction remains necessary in large exchange failures, bankruptcy courts will face a recurring trade-off between transparent creditor proceedings and protecting customers exposed by platform breaches.
The trend: FTX is becoming a defining case for the crypto legitimacy gap, where weak custody and governance controls can turn a platform collapse into a prolonged customer-recovery and regulatory process.