Enlarge / Not the actual FTX headquarters. (credit: Getty Images | guenterguni)

FTX's new leadership has recovered $7.3 billion in assets and is considering whether to restart the cryptocurrency exchange, a company lawyer reportedly said during a hearing at US Bankruptcy Court in Delaware yesterday. The "$7.3 billion in cash and liquid crypto assets" is "an increase of more than $800 million since January," Reuters reported .

"The situation has stabilized, and the dumpster fire is out," FTX attorney Andy Dietderich said at the hearing. Dietderich was also paraphrased as saying that "FTX is negotiating with stakeholders about options for restarting its crypto exchange, and it may make a decision on that in the current quarter."

FTX founder and former CEO Sam Bankman-Fried, who is facing 13 criminal charges , is accused of improperly diverting billions of dollars of FTX customer funds to sister company Alameda. Bankman-Fried received about $2.2 billion in payments and loans from FTX entities, FTX said last month . Three other former executives have already pleaded guilty to criminal fraud charges.

Enlarge / FTX Founder Sam Bankman-Fried arrives at US District Court on March 30, 2023, in New York City after being hit with a new criminal charge for allegedly authorizing a bribe of at least $40 million to one or more Chinese government officials. (credit: Getty Images | Michael Santiago )

Sam Bankman-Fried declared FTX affiliate Alameda Research to be "unauditable" and joked about sometimes losing track of $50 million worth of assets, according to a report issued by FTX's new CEO.

"In an internal communication, Bankman-Fried described Alameda as 'hilariously beyond any threshold of any auditor being able to even get partially through an audit,'" according to the report filed in US Bankruptcy Court in Delaware on Sunday. Bankman-Fried's internal message said:

Alameda is unauditable. I don't mean this in the sense of "a major accounting firm will have reservations about auditing it"; I mean this in the sense of "we are only able to ballpark what its balances are, let alone something like a comprehensive transaction history." We sometimes find $50m of assets lying around that we lost track of; such is life.

In a bit of an understatement, the report said that "Bankman-Fried's statements evidence the challenges a competent audit firm would have had to overcome to audit Alameda's business." The new filing is titled "First interim report of John J. Ray III to the independent directors on control failures at the FTX exchanges." It also details security failures such as using plain text to store private keys linked to over $100 million in assets and sloppy accounting practices like approving invoices in Slack with emoji.

Enlarge / Then-CEO of FTX Sam Bankman-Fried speaks during a House Committee on Financial Services hearing on December 8, 2021, in Washington, DC. (credit: Getty Images | The Washington Post)

FTX founder Sam Bankman-Fried is facing a new criminal charge, with an updated indictment alleging that he violated the Foreign Corrupt Practices Act when he "authorized and directed a bribe of at least $40 million to one or more Chinese government officials."

The superseding indictment returned by a federal grand jury in New York yesterday, and unsealed today, said the bribe's purpose "was to influence and induce one or more Chinese government officials to unfreeze certain Alameda trading accounts containing over $1 billion in cryptocurrency, which had been frozen by Chinese authorities." Including the new charge, Bankman-Fried now faces 13 criminal counts.

In early 2021, Chinese law enforcement officials froze certain Alameda accounts on two of China's largest cryptocurrency exchanges, the indictment said. Bankman-Fried "understood that the Accounts had been frozen by Chinese authorities as part of an ongoing investigation of a particular Alameda trading counterparty."

Enlarge / Sam Bankman-Fried arrives at court in New York on Feb. 16, 2023. (credit: Getty Images | Bloomberg)

Sam Bankman-Fried received about $2.2 billion in payments and loans from FTX entities, mainly from Alameda Research, FTX and its affiliated debtors said yesterday. Bankman-Fried's fellow executives received another $951 million combined, including $839 million to three executives who already pleaded guilty to fraud, FTX and its debtors said in a press release describing a series of filings made in US Bankruptcy Court in Delaware.

As summarized by the Financial Times , "Bankman-Fried and five members of his inner circle transferred $3.2 billion in total to their personal accounts in the form of 'payments and loans,' the funds primarily coming from Alameda Research, a crypto trading hedge fund affiliated with FTX." John Ray, the new CEO leading FTX through bankruptcy proceedings, "has been seeking to identify the location of cryptocurrency and other assets that can be eventually returned to the millions of FTX customers whose accounts have been frozen since its collapse," the Financial Times noted.

Bankman-Fried, who faces criminal fraud and conspiracy charges, is accused of improperly diverting billions of dollars of FTX customer funds to Alameda.

Enlarge (credit: Bloomberg / Contributor | Bloomberg )

A few weeks ago, disgraced FTX founder Samuel Bankman-Fried was in danger of losing his bail package and potentially being jailed until October. The court was fed up with trying to monitor Bankman-Fried’s online activity, and United States district judge Lewis Kaplan decided that the only option left was for Bankman-Fried to recommend independent experts who could help the court set appropriate bail conditions to limit any suspicious online activity.

Kaplan gave Bankman-Fried until this Friday to find experts who could help the court determine precisely what tech privileges needed to be revoked to ensure that Bankman-Fried would be incapable of compromising the court’s investigation into the criminal fraud case, Bloomberg reported . Yesterday, Bankman-Fried officially submitted his recommendations, naming two tech consultants he believes are qualified to advise on his bail conditions: Edward Stroz and Michael McGowan.

Bankman-Fried supplied resumes for both candidates. Stroz was an FBI agent in the 1980s and 1990s, specializing in major international financial crimes. During that time, he created New York City’s Computer Crime Squad and investigated hundreds of cases alleging bank fraud. Since then, he has spent the past two decades managing an international consulting firm, Aon, where his duties include overseeing digital forensics investigations for corporate clients, trial counsel, and civil litigants.