Crypto

Bankrupt Crypto Exchange FTX Could Have 1 Million Creditors

 

Collapsed-crypto exchange FTX outlined a “severe liquidity crisis” in US bankruptcy filings, which said the group could have more than 1 million creditors.

FTX’s filing to a US bankruptcy court, published late on Monday in the United States, said it was in contact with financial regulators.

The exchange said it had appointed five new independent directors at each of its main companies, including its sibling trading firm Alameda Research.

There are more 100,000 creditors involved in the bankruptcy case, although this number could surpass one million, the filings said, as FTX requested that multiple FTX group companies file one consolidated list of major creditors, rather than separate ones.

Also on AF: $1.7 Billion of Clients’ Funds ‘Missing’ After FTX Collapse

 

The filings also confirmed that FTX had responded to a cyber attack on November 11, after saying on Saturday it had seen “unauthorized transactions” on its platform.

FTX, which had been among the world’s largest cryptocurrency exchanges, filed for bankruptcy protection on Friday after panicked traders withdrew $6 billion from the platform in just 72 hours. Earlier rival exchange Binance also abandoned a rescue deal.

 

SBF expanded ‘too fast’

“FTX faced a severe liquidity crisis that necessitated the filing of these cases on an emergency basis last Friday,” the court filing stated.

“Questions arose about Mr Bankman-Fried’s leadership and the handling of FTX’s complex array of assets and businesses under his direction.”

FTX founder and former chief executive Sam Bankman-Fried, said he expanded his business too fast and failed to notice signs of trouble at the exchange, according to a report by the New York Times.

The downfall of FTX, once a rising star of the crypto industry with a $32 billion valuation as of January, is one of the highest-profile crypto blowups, and has sent shock waves through the crypto sector.

 

Contagion concerns

Several global regulators have moved to remove licences from local FTX units, and are looking into the company.

Crypto industry peers and partners have been quick to distance themselves from FTX and demonstrate their sound financials, though several have disclosed they are exposed to FTX, having held tokens on the exchange or by owning FTX’s native token, FTT, which plunged around 94% last week.

Bitcoin has lost 19% this month and other tokens, such as those affiliated with the Solana blockchain once lauded by Bankman-Fried, have suffered too.

“One has to ask why prices are not already lower than they are. The answer may simply be that the scale of this collapse is such that credit concerns now trump every other risk, and participants are focusing on moving assets off exchanges, at the short-term expense of price risk management,” crypto liquidity provider B2C2 said in a note to customers.

 

  • Reuters, with additional editing by Vishakha Saxena

 

 

Read more:

Binance CEO Calls for Clearer Rules to Stabilise ‘Crazy’ Sector

Hong Kong Suggests Expanding Crypto Trade to Retail Market

Crypto Hackers Steal $100 Million in Tokens From Binance

Interpol Seeks Arrest of Crypto Developer Do Kwon – TechCrunch

 

 

Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at vishakha.saxena@asiafinancial.com

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