FTX logo displayed on a phone screen and representation of cryptocurrencies are seen in this illustration photo taken in Krakow, Poland on January 29, 2023. (Photo by Jakub Porzycki/NurPhoto via Getty Images)
FTX, the embattled crypto exchange, has managed to secure a significant asset recovery deal with Modulo Capital. The Bahamas-based hedge fund agreed to return more than $400 million to the beleaguered company. This development brings hope to FTX’s customers who had deposits on the platform, as the company’s new CEO has pledged to prioritize repaying them.
In 2022, Modulo Capital received approximately $475 million in seed funding from Alameda Research, an entity closely associated with FTX. After FTX filed for bankruptcy protection in November 2022, the company’s leadership focused on recovering assets to reimburse clients. The recent court filing revealed that Modulo Capital has agreed to pay $404 million in cash and give up its claim of $56 million in assets held in its accounts on FTX’s crypto exchange. The total value of the deal amounts to $460 million.
The court filing stated, “The Agreement is in the best interests of the Debtors’ creditors because it promptly brings approximately $460 million into the Debtors’ estates without time-consuming and costly litigation. This settlement—including approximately $404 million in cash—returns more than 97% of the Alameda Transfers and 99% of the assets currently held by Modulo.”
As part of the settlement, both FTX and Alameda Research will relinquish their ownership claims over Modulo Capital. The agreement now awaits approval from U.S. Bankruptcy Judge John Dorsey. FTX has urged the court to expedite the process, arguing that the deal “should be swiftly consummated.”
John J. Ray III, FTX’s new CEO, has repeatedly emphasized his commitment to recovering assets to repay the company’s clients. The deal with Modulo Capital is a significant step towards achieving this goal. It follows another recent asset liquidation effort by Alameda Research, which involved a $45 million cash agreement to sell its interest in Sequoia Capital. This move is part of Alameda’s broader strategy to sell its technology and crypto venture assets to pay back creditors.
The $460 million recovery deal marks a substantial milestone for FTX in its quest to repay customers and restore its reputation. The company’s leadership has showcased its determination to prioritize the interests of its clients, and this latest agreement highlights the progress being made in that direction.