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FTX to claw back $460 million from SBF-backed hedge fund

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FTX: Why SBF's case may not be dismissed soon

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  • FTX is looking to recover $460 million for its stakeholders.
  • Alameda Research invested $400 million into Modulo Capital in 2022.

On 22 March, the FTX estate filed a motion to enter into a settlement to recover $460 million in assets for stakeholders.

The assets are a clawback from a Bahamas-based hedge fund Modulo Capital, which received $475 million in seed capital from FTX’s sister trading firm Alameda Research in 2022. This hedge fund was founded last year and headed by two acquaintances of former FTX CEO Sam Bankman-Fried “SBF,” Xiaoyun “Lily” Zhang and Ducan Rhenigans-Yoo.

According to the filing, the $460 million in recovered assets represents over 99% of Modulo’s remaining assets and includes $404 million in cash. Modulo would also waive any claim to $56 million in assets held in FTX.com and FTX.US accounts. Alameda would also lose any claim to its shares in Modulo because of the settlement.

The agreement must still be approved by U.S. Bankruptcy Judge John Dorsey, who has scheduled a motion hearing for 12 April.

Alameda Research was said to have invested around $400 million in Modulo Capital in 2022, making it one of FTX’s largest investments under SBF’s leadership.


Investment made under SBF’s direction

FTX further claimed that Alameda Research’s investment was made under the direction of SBF. Alameda Research and Modulo Capital entered into a limited partnership agreement in June last year in which the former transferred funds to the latter in exchange for 20% ownership of Modulo’s Class A shares.

The filing mentioned:

“The terms of the Agreement provide for the return of nearly all of the value transferred by the Alameda Debtors to the Modulo Entities while avoiding the time and expense of pursuing the Claims through litigation.”

Payments made to entities prior to the bankruptcy filing may be eligible to be given back and redistributed to creditors in bankruptcy proceedings. While most unsecured creditors have a 90-day clawback period, “insiders,” including general partners, instead have a one-year period.

FTX mentioned in its latest presentation to creditors last week that claims against it had surpassed $11 billion, compared to only $4.7 billion in assets. On the other hand, it has a total shortfall of nearly $7 billion. Though this settlement of $460 million would be a huge win for creditors, it still represents less than 7% of the current shortfall.


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Saman is a News Editor at AMBCrypto. Her background in History and English expanded on her knack for editing and presenting all sides of a story without bias. With a strong will to learn, Saman is always up for exploring unknown territory, and crypto, with its ever-changing landscape, offers just that.
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