FTX negotiates $400 million return of Obscure Hedge Fund
The founders of trading firm Modulo Capital are in talks with FTX over returning the investment Sam Bankman-Fried made in the funds.
< p class="css-at9mc1 evys1bk0">After the collapse of cryptocurrency exchange FTX last year, bankruptcy attorneys, federal prosecutors and forensic investigators embarked on a global hunt to recover billions of dollars in lost deposits and reimburse the company's customers.A large sum of money remained for month in an interest-bearing account at JPMorgan Chase, the largest bank in the world. JPMorgan owns $400 million that FTX founder Sam Bankman-Fried invested in an obscure hedge fund, Modulo Capital, four people with knowledge of the matter have said.
The founders of Modulo, which came to the attention of prosecutors investigating the FTX implosion, are currently negotiating the return of funds with bankruptcy attorneys representing the exchange, said two of the people, who were not authorized to speak publicly. There is no indication that the founders of Modulo have done anything wrong, and they are asking FTX to release them from certain legal liabilities in exchange for returning the money, one of the people said. p>
The talks show the complexity of recovering funds in one of the largest corporate bankruptcies in recent history, with an initial shortfall estimated at 8 billion of dollars. Until late last year, FTX was among the largest and most powerful companies in the emerging crypto industry, a prolific investor that backed hundreds of other start-ups. Now investigators must not only sift through company accounts, but also unravel a vast network of outside investments, then negotiate to secure the money.
Recover $400 million from Modulo would be a major blow for FTX. Last month, attorneys for FTX said they had located $5.5 billion in cash, securities and digital assets held in client accounts or stored in other parts of the business. But that total includes a large stash of cryptocurrencies whose true value is difficult to determine, and the company's attorneys say FTX still has a significant asset shortfall.
FTX is suing for another $4.6 billion tied up in more than 300 companies backed by Mr. Bankman-Fried. The $400 million Modulo transaction was one of his biggest outlays. But other investments have funded crypto start-ups that are now of dubious value, meaning it's unclear how much money FTX's lawyers can recoup from those companies under so-called recovery lawsuits to return clients, lenders and other creditors whole.
Modulo funds are stored at JPMorgan because the bank served as the hedge fund's prime broker , managing its trading in stocks and stock futures. In November, around the time FTX collapsed, Modulo's holdings were converted to cash. The money has remained with JPMorgan ever since.
In recent weeks, FTX's new management has mounted an aggressive campaign to reclaim money. Last month, FTX sued Voyager Digital, a crypto credit company, to recover $446 million in loan repayments. FTX too
The founders of trading firm Modulo Capital are in talks with FTX over returning the investment Sam Bankman-Fried made in the funds.
< p class="css-at9mc1 evys1bk0">After the collapse of cryptocurrency exchange FTX last year, bankruptcy attorneys, federal prosecutors and forensic investigators embarked on a global hunt to recover billions of dollars in lost deposits and reimburse the company's customers.A large sum of money remained for month in an interest-bearing account at JPMorgan Chase, the largest bank in the world. JPMorgan owns $400 million that FTX founder Sam Bankman-Fried invested in an obscure hedge fund, Modulo Capital, four people with knowledge of the matter have said.
The founders of Modulo, which came to the attention of prosecutors investigating the FTX implosion, are currently negotiating the return of funds with bankruptcy attorneys representing the exchange, said two of the people, who were not authorized to speak publicly. There is no indication that the founders of Modulo have done anything wrong, and they are asking FTX to release them from certain legal liabilities in exchange for returning the money, one of the people said. p>
The talks show the complexity of recovering funds in one of the largest corporate bankruptcies in recent history, with an initial shortfall estimated at 8 billion of dollars. Until late last year, FTX was among the largest and most powerful companies in the emerging crypto industry, a prolific investor that backed hundreds of other start-ups. Now investigators must not only sift through company accounts, but also unravel a vast network of outside investments, then negotiate to secure the money.
Recover $400 million from Modulo would be a major blow for FTX. Last month, attorneys for FTX said they had located $5.5 billion in cash, securities and digital assets held in client accounts or stored in other parts of the business. But that total includes a large stash of cryptocurrencies whose true value is difficult to determine, and the company's attorneys say FTX still has a significant asset shortfall.
FTX is suing for another $4.6 billion tied up in more than 300 companies backed by Mr. Bankman-Fried. The $400 million Modulo transaction was one of his biggest outlays. But other investments have funded crypto start-ups that are now of dubious value, meaning it's unclear how much money FTX's lawyers can recoup from those companies under so-called recovery lawsuits to return clients, lenders and other creditors whole.
Modulo funds are stored at JPMorgan because the bank served as the hedge fund's prime broker , managing its trading in stocks and stock futures. In November, around the time FTX collapsed, Modulo's holdings were converted to cash. The money has remained with JPMorgan ever since.
In recent weeks, FTX's new management has mounted an aggressive campaign to reclaim money. Last month, FTX sued Voyager Digital, a crypto credit company, to recover $446 million in loan repayments. FTX too
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