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FTX is selling crypto and stockpiling cash to pay clients with accounts frozen since collapse

FTX is selling crypto and stockpiling cash to pay clients with accounts frozen since collapse
Collapsed crypto exchange FTX raises cash to compensate clients. Credit: Andrés Núñez
  • Bankrupt crypto exchange FTX looks to compensate clients.
  • Some Chinese investors find ways to buy crypto as economy tanks.
  • NFT marketplace Magic Eden plans to streamline wallet experience.

FTX sells crypto, raises cash to compensate clients

FTX is selling off crypto assets and stockpiling cash as bankruptcy advisers prepare to compensate clients whose accounts were frozen in 2022 when the exchange failed, Bloomberg reported.

The firm’s four biggest affiliates almost doubled their cash to $4.4 billion at end-2023 from $2.3 billion in October, Chapter 11 monthly operating reports show, and total cash is probably more if all affiliates were included, the report said.

Also, FTX is suing associates of former CEO Sam Bankman-Fried and companies that withdrew funds from the exchange before it filed Chapter 11.

Bankruptcy claims broker Cherokee Acquisition said claims worth more than $1 million were trading at about 73 cents on the dollar last week, up from 38 cents in October.

Still, FTX has said it doesn’t expect clients to be reimbursed in full.

An FTX representative declined to comment, Bloomberg said.

Chinese investors look to crypto amid stock market rout

Although crypto trading has been banned in China since 2021, many investors there are finding ways to move money into digital assets, Reuters reported.

China’s economic downturn “has made investment on the mainland risky, uncertain and disappointing, so people are looking to allocate assets offshore,” a Hong Kong-based crypto exchange executive who declined to be identified told Reuters. “Almost every day, we see mainland investors coming into this market.”

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Home prices have fallen in recent years amid China’s crackdown on the property sector and the stock market has been in decline since 2021.

And while there are controls on cross-border capital movement, crypto exchanges including OKX and Binance still offer trading services for Chinese investors, who can also open overseas bank accounts to buy crypto, according to the report.

Chainalysis said crypto-related activities in China have increased, as its global ranking in peer-to-peer trade volume rose to 13 in 2023 from 144 the previous year.

Magic Eden readies multi-chain wallet

NFT marketplace Magic Eden is preparing to introduce a multi-chain wallet that is designed to consolidate fragmentation of the NFT market, Crypto.News reported.

The wallet will offer a more seamless experience across different blockchain networks, perhaps as soon as January 29, the report said.

While NFT enthusiasts generally use multiple wallets for different blockchains, Magic Eden’s multi-chain wallet will enable managing Bitcoin, Ethereum, Solana, and Polygon in one place.

Crypto market movers

  • Bitcoin is up 1.25% today at $39,264.11.
  • Ethereum is up 1.17% today at $2,112.07.

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