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Is FTX truly recovering?


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It is no longer news that the collapse of FTX, a leading crypto exchange last year deteriorated the situation in the industry. The crypto exchange was established in 2019 and by 2021, it emerged as the third-largest exchange by volume. Prior to its collapse in November 2022, the crypto industry was already battling with the implications of the global economic downturn as well as the crash of the Terra project. These developments had earlier plunged the industry into a bearish state. Amid the bear market, FTX started investing in struggling firms. At one time, it even issued a $250 million facility to one of the firms affected by the market conditions, BlockFi. However, with the collapse of FTX, situations in the market worsened.

Genesis of the FTX crisis

The cause of the downfall of FTX is not far-fetched. A leaked balance sheet of Alameda Research showed that it tied up billions of its assets in FTT, the native token of FTX. Worthy of note that Alameda Research and FTX were both founded by Sam Bankman-Fried. While FTX operated as a crypto exchange, Alameda Research was a quantitative trading firm which offered liquidity in the volatile market.

Certainly, the revelation in the leaked balance sheet exposed the illicit activities of the executives of FTX and Alameda. Following this development, Binance resolved to liquidate its entire FTT holdings. This thus plunged the token by more than 40% and also triggered the massive withdrawal of funds from the exchange. At the inception of the crisis, FTX sought for $9 billion in rescue funds to avert its downfall and exit from the market. But, all the efforts to secure the funding failed, thereby forcing the exchange to file for bankruptcy.

Within a few days, the contagion of the collapse began to spread across the industry. Several firms like Genesis, Galaxy Digital, Multicoin Capital, BlockFi, Galois and many more began to struggle owing to their exposure to the exchange. For instance, Galaxy alone had $75 million in exposure to the exchange. Apart from institutional exposure to FTX, scores of individual investors in the exchange also suffered a huge loss in their investments, thereby triggering various investigations from regulators across the globe.

The progress so far

After its collapse late last year, FTX is gradually finding its way out of the turmoil. Presently, the defunct crypto exchange has made a significant step in recovering users’ assets. Last month, a representative of the crypto exchange, Andy Dietderich told a judge that FTX has recovered more than $7.4 billion in liquid assets. 

Andy Dietderich made the revelation during a court hearing on April 12, 2023. According to him, the exchange recently recovered $2.4 billion in addition to the $5 billion that has been in its care since January. Furthermore, the figure represents a remarkable height for FTX that’s on a progressive recovery path. As of when the crypto exchange filed for Bankruptcy, it only had $3.3 billion under its care.

To some extent, the figure represents a significant part of the total mismanaged funds under the previous administration led by Sam Bankman-Fried. According to reports, about $9 billion of users’ assets went down with the crypto exchange under the previous leadership. Recovering $7 billion out of $9 billion is indeed a remarkable development. 

Meanwhile, the cryptocurrency exchange still has its funds locked up in the Bahamas. Then, the Bahamas Securities and Exchange Commission seized assets belonging to the local subsidiary of FTX in its region. Though, the funds in question are in FTT tokens.

Likewise, another significant development that has surfaced which indicates that the crypto exchange is gradually recovering is the recent resumption of Withdrawal on the Japan subsidiary of FTX. Recall that in February, FTX Japan announced that it’ll resume withdrawal on February 21, 2023. According to the announcement, users of the crypto exchange will have access to withdraw 100% of their assets stuck in the exchange.


The present leadership of FTX under John Ray III is working to recover as much as they could recover of customers’ and investors’ funds. Though the new Chief Executive Officer once admitted that they can’t recover all of the assets owing to the severity of the damage. 

The chances of the crypto exchange coming back to life may never manifest. Nevertheless, there are strong indications that users will be able to access their funds soon. Though, the percentage they’ll be able to access depends on the assets the new leadership can cover. 

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Olaleye Komolafe
Olaleye Komolafe
Olaleye is a professional reporter with vast experience in web3, cryptocurrencies, and NFT journalism. He enjoys writing about the evolving metaverse sphere and the prevalence in the crypto sphere. Notably, some of his contents have been published in numerous international publications. Away from the crypto world, Olaleye is a political scientist and a lover of football

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