FTX Could Owe More Than 1 Million Creditors

Documents filed in bankruptcy court on Monday show that the collapsed cryptocurrency exchange FTX and its affiliated businesses may be owed debts to more than one million people and organizations, draining traders’ accounts and It shows the extent of the corporate collapse that has brought down the cryptocurrency industry. crisis.

In FTX’s first substantial court filing since it filed for bankruptcy on Friday, the company’s lawyers provided few details about the state of the business. It said it is in contact with “dozens” of federal, state and international regulators and law enforcement officials, including the Commission, the Department of Justice and the Commodity Futures Trading Commission.

These investigations began last week after deposit runs left FTX short of $8 billion. In spectacular corporate drama, a company once considered one of the safest and most trustworthy in the freewheeling cryptocurrency industry has collapsed virtually overnight.

The company’s founder and chief executive, Sam Bankman-Fried, announced his resignation on Friday when a bankruptcy filing was filed in the federal bankruptcy court in Delaware. Bankman-Fried agreed to resign at around 4:30 a.m. that day after consulting with his own legal team, the new documents say.

He handed control over to corporate crisis veteran John J. Ray III. Since then, Ray and other FTX officials have worked “around the clock” to get the company back to normal, according to the bankruptcy filing. The Filing said it responded to “cyber attacks.”

Until last week, Bankman-Fried was considered a leader in the cryptocurrency industry. He frequently attended the chambers of Congress and sought to enact laws governing new, largely unregulated technologies. He is also a prominent donor, donating more than $5 million of his money to President Biden’s campaign.

But his fall was swift. Last week’s deposit run left FTX unable to meet customer demand. Bankman-Fried has signed a deal to sell the company to Binance’s biggest rival, Binance. This was a humble surrender after a lengthy online skirmish between Bankman-Fried and his Binance CEO, Changpeng Zhao. However, a review of FTX’s financials found a number of issues and Binance pulled the deal.

Bankman-Fried rushed to raise new capital, but could not find a solution and filed for bankruptcy. The SEC and DOJ are now investigating his administration of FTX. They focus on whether FTX improperly transferred customer funds to Alameda Research.

Alameda is one of more than 100 affiliates that joined FTX in its bankruptcy filing on Friday.