FTX to Collect $404 Million in Proposed Deal With Modulo

Steven Church, Bloomberg News

The FTX Cryptocurrency Derivatives Exchange logo on a laptop screen arranged in Riga, Latvia, Nov. 24, 2022. The implosion of Sam Bankman-Fried’s FTX empire dealt a harsh blow to the Bahamas’ ambitions to be a hub for the crypto industry, and it’s causing massive pain for locals who treated the now-bankrupt exchange like a bank. Photographer: Andrey Rudakov/Bloomberg , Bloomberg

(Bloomberg) -- FTX Group will recover about $404 million that its disgraced founder Sam Bankman-Fried allegedly transferred to the investment fund Modulo Capital, according to a proposed bankruptcy settlement made public Wednesday.

The agreement adds to the slowly growing pot of money FTX has been trying to collect since the crypto firm filed bankruptcy last year.

Modulo Capital, managed by Xiaoyun “Lily” Zhang and Duncan Rheingans-Yoo, got $475 million last year before FTX collapsed into bankruptcy amid fraud allegations, according to the settlement, filed Wednesday afternoon in federal court in Wilmington, Delaware. Modulo has no other money it could use to repay the funds, FTX said.

The proposed settlement avoids an expensive lawsuit in which Modulo would fight FTX for the cash, according to court records. FTX said the deal is worth $460 million because it would bring in $404 million in cash and require Zhang and Rheingans-Yoo to drop claims they have against the company for $56 million.

The agreement must be approved by US Bankruptcy Judge John Dorsey.

The case is FTX Trading Ltd., 22-11068, US. Bankruptcy Court for the District of Delaware.