Missing, Stolen FTX Assets; This Fund sees Bitcoin at $1 million

FTX’s bankruptcy team is struggling to track down all of the cryptocurrency exchange’s assets after it collapsed and filed for Chapter 11 on November 11. In a bankruptcy court hearing on Tuesday, FTX’s lawyer said that a significant amount of assets are missing or stolen, the Wall Street Journal reported.




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The company’s new management wants to pursue and recover some of the billions of dollars that went through FTX and its sister trading firm Alameda Research.

Inexperienced, Unsophisticated, in danger

“What we have here is a global, international organization, but run as a personal fiefdom of (company co-founder and former CEO) Sam Bankman-Fried,” FTX attorney James Bromley said in Delaware bankruptcy court Tuesday . “FTX was led by inexperienced and unsophisticated individuals, some or all of whom were compromised.”

Bromley described the fall of FTX as “one of the most sudden and difficult falls in the history of corporate America and the history of corporate entities around the world.”

FTX has attracted millions of individual and institutional customers. Lawyers are not sure whether the recoverable assets are enough to meet obligations. Court papers show the 50 largest creditors are owed more than $3 billion. FTX staff said it will take months to resolve claims by customers and Alameda’s dangerous trades. Meanwhile, funds for customers on the exchange are still frozen.

And as further evidence of SBF’s mismanagement, court papers revealed last week that one of FTX’s units spent $300 million in company funds on homes in the Bahamas for former senior staff members and Bankman-Fried’s parents.

Now, newly appointed CEO John J. Ray III, who oversaw Enron’s bankruptcy liquidation, is tasked with saving whatever funds he can for investors and customers. It could be the toughest test yet. “I have never seen such a complete failure of corporate controls in my career and such a lack of reliable financial information,” he previously said.

Over FTX: Bitcoin Battle Test

But while Bankman-Fried seems to be flying too close to the sun, Cathie Wood still believes that Bitcoin is going to the moon.

Wood, founder and CEO of ARK Investment Management, maintains her Bitcoin price target of $1 million a coin by 2030, she told Bloomberg Businessweek on Tuesday afternoon. Even as the world’s largest crypto hit two-year lows on Monday.

“Sometimes you need to battle-test. You need to go through crises to see the survivors, to test the infrastructure and the thesis. We think Bitcoin is coming out of this smelling like a rose,” said Wood.

“If you look at the blockchain … the infrastructure, the technology hasn’t taken a beating during this whole crisis,” she said. Wood points to Bitcoin’s hash rate, the highest ever, as proof of security. And the total value of Ethereum pledged is at an all-time high of $24 billion.


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Ark invests

Wood is putting her money where her mouth is, picking up hit shares Coinbase (COIN) stock and Grayscale Bitcoin Trust (GBTC).

The Ark Next Generation Internet ETF (ARKW) and ARK Innovation ETF (ARKK) funds, combined, bought nearly 177,000 shares in GBTC worth $1.5 million on Monday. That’s after ARKW bought more than 315,000 shares of GBTC worth about $2.8 million last Monday, Bloomberg reported.

Since November 9, the two funds have bought about 1.3 million BOINN shares, which are worth $56 million based on Tuesday’s closing price, bringing their total holdings to 8.37 million shares.

“I think Coinbase is going out of this very strong, it just lost a very big competitor in FTX,” said Wood in a Bloomberg interview.

Coinbase’s current share prices are likely lower due to fear and a lack of understanding of crypto, she said. Still, crypto is unlikely to face a “Lehman moment,” because the scale is much smaller. And although the state of FTX was “fraud,” Wood predicted that the claims will be much less in the end than those from the Bernie Madoff scandal.

Meanwhile, decentralized financial platforms, which use secure distributed ledgers like cryptocurrencies, are set to take off because of their increased transparency and lower counterparty risk, says Wood.

COIN and GBTC are now ARK’s 14th and 41st largest holdings, across all its funds, according to the firm’s latest data.

Bitcoin rose above $ 16,500 on Wednesday evening. COIN stock rose another 5% by market close after jumping 5.2% on Tuesday. And GBTC stock jumped 9.3% after gaining 2% on Tuesday.

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