Bankrupt crypto exchange FTX has reached a deal to recover more than $400 million in cash from hedge fund Modulo Capital, pulling back 97 percent of the money that FTX companies sent to the hedge fund in 2022, according to court documents filed on Wednesday.
Bahamas-based Modulo agreed to pay $404 million in cash and
give up its claim to $56 million in assets held on FTX's crypto exchange,
according to a filing in US bankruptcy court in Delaware.
FTX filed for bankruptcy protection in November, saying it
was unable to completely repay customers who had deposited funds on its
exchange. FTX's new CEO, John Ray, has said his top priority was recovering
assets to repay FTX customers.
FTX's affiliated hedge fund Alameda Research sent $475
million (roughly Rs. 3,900 crore) to Modulo in a series of transfers beginning
in May 2022, a time when FTX was losing money and heading toward bankruptcy,
according to the court filings.
Alameda, at the direction of FTX founder Sam Bankman-Fried,
had paid $25 million to acquire a stake
in Modulo and contributed $450 million to an investment fund managed by Modulo,
according to the filings.
The settlement recovers most of those payments and takes 99
percent of Modulo's remaining assets, according to the filings.
FTX and Alameda will give up their claim to any ownership of
Modulo as part of the settlement. FTX also agreed to not take further actions
against Modulo or its principals Xiaoyun Zhang and Duncan Rheingans-Yoo related
to the 2022 payments, according to the filings.
FTX, Bankman-Fried, and Modulo Capital did not immediately
respond to requests for comment.
FTX has previously recovered more than $5 billion in its
quest to repay customers of the bankrupt crypto exchange. FTX said last week
that it was investigating more than $3.2 billion that was transferred out of
the company through payments and loans to company founders and key employees.
Bankman-Fried has been charged with stealing billions of
dollars in FTX customer funds to cover losses at Alameda Research, and making
tens of millions of dollars in illegal political donations to buy influence in
Washington, DC.
He denies wrongdoing and is fighting to stay out of jail
pending his scheduled October 2 fraud trial. © Reuters
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