How much debt can FTX, which holds $3.4 billion in crypto assets, repay?

Written by: Cat Brother, Wu Shuo

According to the latest court documents dated September 10, as of August 31, FTX held a total of $3.4 billion in crypto assets, primarily consisting of $1.16 billion SOL, $560 million BTC, $192 million ETH, $137 million APT, $120 million USDT, $119 million XRP, $49 million BIT, $46 million STG, $41 million WBTC, and $37 million WETH. These ten major assets accounted for 72% of the crypto assets organized by FTX. The document also detailed that SBF and other executives (Nishad Singh, Zixiao "Gary" Wang, and Caroline Ellison) received $2.2 billion in cash, cryptocurrencies, equity, and real estate in the months leading up to FTX's bankruptcy. This could have significant implications, as U.S. law allows for the recovery of these funds and their inclusion in the asset pool available for creditors. The document also reported 38 apartments, luxury penthouses, and other properties in the Bahamas, estimated to be worth about $200 million; as well as attempts to recover funds donated to politicians and charities (such as the Metropolitan Museum of Art in New York).

The total amount of claims currently stands at approximately $16 billion + X; the organized assets are $7 billion + X; legal fees for the first year are estimated at $500-600 million. As X remains unclear, the final proportion of assets that can be compensated to customers is also still uncertain.

Below are the main contents of the court documents organized by Wu Shuo, with the original link:

https://drive.google.com/file/d/1Y4jMmyEQq-qOoHL2blXhVjRMMi06X9HB/view?usp=sharing

Overview of Non-Customer Claims

Since the non-customer claims deadline of June 30, 2023, over 2,300 non-customer claims have been submitted, totaling over $379 billion. After removing $313 billion in duplicates, the remaining non-customer claims amount to $65 billion, including:

● $43.5 billion from the IRS (subordinated);

● $9.2 billion from FDM (FTX Digital Markets Ltd) (considered invalid/duplicate);

● $4.1 billion in lawsuits and priority claims from Genesis;

● $2 billion in lawsuit claims from Celsius;

● $2.4 billion in miscellaneous fraud claims;

● $1.4 billion in contract/503(b)(9) claims;

● $1.1 billion in loans payable;

● $600 million in contract claims from Voyager;

● $400 million in equity claims;

Current Customer Claims

As of August 24, approximately 36,075 customer claims have been submitted, totaling $16 billion.

● At FTX.com and FTX US, the debtors have so far listed $10.9 billion in customer claims.

● Claimants holding approximately $7.9 billion (72%) of the claims have not agreed to or disputed their scheduled claims.

● Claimants holding approximately $1.2 billion (10%) of the claims have agreed to their scheduled claims.

● Claimants holding approximately $1.9 billion (18%) of the claims have disputed their scheduled claim amounts. Mediation for disputed claims is currently underway.

● If customers dispute their scheduled claims, they may submit proof of claim by September 29, 2023 (the customer claims deadline).

Recovered Assets

● Assets recovered by the government amount to $800 million (assets seized by SDNY, including cash and public equity investments);

● Broker assets of $500 million (risk broker assets secured and managed by the debtor);

● Class A crypto assets of $3.4 billion;

● Determined and secured post-bankruptcy cash of $1.5 billion;

● Cash balance determined, secured, and managed by the debtor on the litigation date of $1.1 billion;

● Potential additional property value, including venture capital, Class B crypto assets, receivable tokens, counterclaims, potential avoidance/preference actions, FTX 2.0, and investments in subsidiaries.

Class A Crypto Assets

As of August 31, FTX held a total of $3.4 billion in crypto assets, primarily including $1.16 billion SOL, $560 million BTC, $192 million ETH, $137 million APT, $120 million USDT, $119 million XRP, $49 million BIT, $46 million STG, $41 million WBTC, and $37 million WETH. These ten major assets accounted for 72% of the crypto assets organized by FTX.

Broker Investments

The debtor's brokerage accounts hold $529 million in securities, including:

● $417 million in Grayscale Bitcoin Trust;

● $70 million in Grayscale Ethereum Trust;

● $36 million in Bitwise 10 Crypto Index Fund;

● $6 million in Grayscale ETC, LTC Trust, and Digital Large Cap;

● Less than $100,000 in BlackRock stock.

Venture Capital Portfolio

As of the application date, the venture capital portfolio includes 438 investments, with a total capital investment of approximately $4.5 billion. (Note: The value of invested capital does not represent potential recoverable value.)

$506 million Token Investments

● Tokens post-ICO are in the process of being delivered and are considered lower risk. Once received, they become assets in the debtor's crypto asset portfolio.

● Pre-ICO tokens are early-stage tokens considered higher risk, as they have not yet been minted, making their value uncertain.

Properties in the Bahamas

There are 38 properties in the Bahamas, with a book value of $222 million and an estimated value of $199 million.

Potential assets being pursued for recovery

$588 million realized and $16.6 billion in identified potential assets

Investments: Over 430 potential investments

$588 million realized and approximately $5.3 billion in additional investments under investigation (partially reflected in venture capital analysis).

Non-debtor affiliates: Over 7 potential actions

$3.2 billion received from FTX Digital Markets Ltd and six other non-debtor affiliates.

Insiders: Over 50 potential actions

$2.2 billion in cash, cryptocurrencies, equity, and real estate received from SBF, Nishad Singh, Zixiao "Gary" Wang, and 46 others.

Lenders: Over 37 potential actions

$5 billion received or settled by BlockFi, Genesis, and Voyager Digital; the debtor is evaluating claims related to other lenders.

Political and charitable donations to third parties total $86.6 million (SOFA Section 9).

Vendors: Over 884 potential actions

During the priority period, vendors received a total of $190.3 million.

Crypto Assets and Venture Capital

BTC + ETH

As part of the ongoing asset tracking and recovery process, the debtor has identified approximately $833 million in BTC and ETH assets (token value as of August 31, 2023), excluding $487 million in securities valued in BTC/ETH.

Class B Cryptocurrencies

The debtor's cryptocurrency holdings include certain tokens that do not meet liquidity thresholds and/or are largely controlled by bankrupt entities. For reporting purposes, these tokens are classified as Class B. There are over 1,300 types of Class B tokens.

Venture Capital Summary

As of the application date, the venture capital portfolio includes 438 investments, totaling approximately $4.5 billion in raised assets.

(Translated using Deepl)

$673 million invested in venture capital has been realized as $588 million (87% of the invested amount), with an additional $137 million in uninvested commitments canceled.

Remaining Startup Investment Portfolio of the Debtor

The top 10 investments account for 66% of the remaining tokens, equity, fund, and loan investments.

(Translated using Deepl)

Equity Investment Overview

Equity investments account for 73% of the remaining venture capital, with a total of 202 investments. Major investments include $1.152 billion in Genesis Digital; $500 million in Anthropic; and $111 million in Voyager Digital.

LP/Fund Investment Overview

The debtor has sold certain LPs and reduced uninvested capital by $137 million. Ongoing sales will release liabilities related to approximately $800,000 in uninvested capital. The remaining LP holdings, excluding sold holdings, total $167 million, accounting for 4% of the venture capital portfolio.

Token Investment Overview

Token investments account for 13% of the remaining venture capital, with a total of 171 investments and an average investment size of $3 million. Major investments include $137 million in Solana; $80 million in NEAR; and $68 million in Hole.

Loan Investment Overview

Loan investments account for 10% of the remaining venture capital, with a total of 11 investments and an average investment size of $33 million. Major investments include $100 million in Dave and $75 million in Voyager Digital.

Non-Debtor Investment Overview

The total financing amount for non-debtor investments is $782 million, including 9 investments with an average investment size of $87 million. Major investments include $400 million in Mount Olympus Capital and $300 million in K5 Global Holdings.

FTX 2.0 Process Update

The debtor began the marketing process for FTX.com and FTX US exchanges in May 2023.

● The process aims to consider different potential structures, including acquisitions, mergers, reorganizations, or other transactions, to restart the FTX.com and/or FTX US exchanges.

● The debtor is also considering providing management and operational services.

The timing of the transaction will depend on the nature of the transaction, the readiness of bidders, and other considerations.

(Translated using Deepl)

Issues Still Under Discussion in the Draft Plan

● The expected size of claim categories, the recovery fund pool, and estimates of creditor recoveries.

● The amount of property to be allocated to under-redeemed claims versus the total asset pool.

● The decision and method for selling or restructuring the FTX.com exchange.

● The claims transfer process after the plan's effective date (recovery rights tokens or crypto assets).

● Corporate governance and future management of confirmed entities.

● Any necessary revisions to the plan to confirm that these revisions are in the best interests of all creditors.