Arush Sehgal, a former member of FTX’s unsecured collectors’ committee (UCC), has delivered a blistering critique of the authorized workforce that oversaw FTX’s chapter, accusing them of derailing a revival plan that might have returned “tens of billions” of {dollars} to collectors.
Sehgal, the Head of Crypto at Alpaca, made the allegations in an in depth submit on X whereas quoting Kraken chief govt officer Arjun Sethi’s announcement that the trade had raised $800 million at a $20 billion valuation.
An account linked to the convicted founding father of the defunct FTX trade reposted Sehgal’s submit.
Three well-funded bidders left empty-handed
In response to Sehgal, he resigned from the UCC to work on a bid for FTX 2.0 alongside Sethi and Tribe Capital, wrongly assuming the chapter legal professionals meant to permit the sale to proceed.
He wrote, “Opposite to Andrew Dieterich’s lies about no person wanting to purchase FTX2.0, there have been 3 credible and well-funded finalists within the sale course of.”
Seghal stated the three finalists have been the Sethi-Tribe consortium backed by an undisclosed public trade, Bullish led by Thomas Farley, and Determine headed by Mike Cagney.
Since then, Bullish has gone public at a $6 billion valuation and is now price $9 billion, whereas Determine accomplished its IPO at $5 billion and is valued at $8 billion, and Sethi “is now IPO’ing Kraken,” in accordance with Seghal.
When FTX was contemplating relaunching the platform following its famed crash, it reportedly reached out to greater than 75 bidders beginning in Could 2023.
“Every of those affords had vital fairness parts on the desk that will have added tens of billions in worth to all FTX collectors holdings however the legal professionals killed the deal,” Seghal wrote in his submit on X.
“This was as a lot of a shock to us as most people and collectors given the worth left on the desk,” he added.
On the time of its collapse, FTX was the second-largest cryptocurrency trade globally, and market circumstances appeared favorable for a reboot.
Conflicts of curiosity accusations
FTX collectors filed a class-action lawsuit in opposition to Sullivan & Cromwell in February 2024, alleging the agency actively participated within the fraud. A bipartisan group of US senators raised objections to the agency’s participation, citing obvious conflicts of curiosity.
An unbiased investigation shared in Could 2024 that Sullivan & Cromwell was not complicit within the fraud that induced FTX’s collapse. The lead examiner of the investigation, Robert Cleary, launched one other report in September 2024, absolving the regulation agency of ignoring “crimson flags” when it represented Sam Bankman-Fried, FTX’s disgraced founder, who’s at present serving a 25-year jail sentence, for his buy of shares of Robinhood Markets.
In October of the identical 12 months, the FTX collectors voluntarily dismissed their lawsuit in opposition to the regulation agency, stating that the investigation reviews gave them sufficient proof that there was no declare there.
Liquidation vs acquisition
The chapter property defended its determination to pursue liquidation quite than a sale. Throughout a January 2024 court docket listening to, Dietderich declared any revival plans formally useless, stating that months of negotiations had didn’t safe obligatory funding and that the fee was “just too excessive” to create a worthwhile transaction.
He stated, “No investor is able to commit the wanted capital to a restart of the offshore trade, nor has a purchaser emerged for that trade as a going concern.”
Seghal’s submit is a contradiction to that declare, as he wrote that “FTX2.0 bidders promised to tokenize claims and run the multi-billion greenback enterprise and crypto portfolio, who higher to run this than Arj, considered one of our era’s biggest capital allocators, or Tom/Cagney every of whom are absolute, stone chilly killers on a warpath to victory.”
He continued, “FTX collectors would have benefited from any of them, as a substitute we obtained John ‘Anthropic is vaporware’ Ray, Sullcrom shut down the sale and principally all 9M clients moved to Hyperliquid.”
