June 6, 2023

FTX reaches agreement to recover over $400 million from Bahamian hedge fund

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FTX reaches agreement to recover over $400 million from Bahamian hedge fund

Interim management of the bankruptCryptocurrency exchange FTX has reached an agreement to recover more than $400 million from Bahamas-based hedge fund Modulo Capital. This is evidenced by court documents found by Reuters journalists.

Modulo agreed to pay $404 million andwaive claims for $56 million in assets held on FTX. Thus, the exchange received 97% of the assets that FTX-related firms sent to the hedge fund for 2022.

Alameda Research sent Modulo $475Msince May 2022, when FTX was losing money and approaching bankruptcy, according to court documents. According to the documents, Alameda, at the behest of FTX founder Sam Bankman-Fried, paid $25 million to acquire a stake in Modulo and contributed $450 million to an investment fund managed by Modulo.

FTX and Alameda will relinquish ownership of Modulo as part of a settlement agreement. FTX also agreed to take no further action against Modulo or its executives.

Interim FTX managers were able to detectonly $2.7 billion of the $11.6 billion that was supposed to remain in customer accounts. Part of the amount could be attributed to Alameda Research, which borrowed $9.3 billion from customer accounts before the crash. It was recently revealed that the founders and key employees of the failing FTX received $3.2 billion in payments and loans, mostly from a subsidiary of Alameda Research.

FTX recently sued FTX Digital Markets and its Bahamian liquidators, alleging they are wrongfully claiming the assets of the cryptocurrency exchange.