FTX Recovers $400 Million from Modulo Capital Amid Bankruptcy Proceedings

FTX's Financial Recovery Efforts

Bankrupt crypto exchange FTX has successfully negotiated a settlement to recover more than $400 million from hedge fund Modulo Capital. This deal allows FTX to reclaim 97% of the funds transferred to Modulo in 2022. The agreement involves Modulo returning $404 million in cash and relinquishing its claim to $56 million in assets on FTX's exchange platform.

Background and Context

FTX, which filed for bankruptcy in November, had been unable to fully reimburse customers' deposits. The company's new CEO, John Ray, has prioritized asset recovery to facilitate repayments. FTX's associated hedge fund, Alameda Research, had transferred $475 million to Modulo beginning in May 2022, a period marked by financial instability for FTX.

Settlement Details

The settlement allows FTX and Alameda to recover the majority of the payments made to Modulo. It also includes relinquishing any ownership claims in Modulo, ensuring that FTX cannot pursue further legal actions against Modulo or its principals, Xiaoyun Zhang and Duncan Rheingans-Yoo, regarding the 2022 transactions.

Ongoing Investigations and Legal Challenges

FTX continues its efforts to recover funds, having previously secured over $5 billion for customer repayments. The company is also investigating the transfer of over $3.2 billion through payments and loans. Meanwhile, FTX founder Sam Bankman-Fried faces charges of misappropriating customer funds and making illegal political donations. He denies the allegations and is preparing for his upcoming fraud trial.

This strategic recovery from Modulo Capital marks a significant step in FTX's ongoing mission to resolve its financial obligations and restore customer trust.