FTX says it owes creditors more than $3 billion

FTX says it owes creditors more than $3 billion


FTX, the cryptocurrency exchange that collapsed amid a liquidity crunch earlier this month, owes creditors at least $3 billion, he said in a new court filing.

And 10 of his creditors owe at least $100 million.

The revelations, which happened a filing with the U.S. Bankruptcy Court in Delaware on Saturday evening, offer a stark portrait of the large number of entities that had significantly invested in, lent money to, or otherwise engaged with a three-year-old company that had done little to demonstrate that it could properly protect the assets entrusted to it. Its top 50 creditors owe a total of $3.1 billion, according to the filing, with the largest owing at $226 million.

Names of creditors have been redacted. But what is known is that during its short history, FTX has received capital from a large number of investment companies, including Sequoia Capital, BlackRock and Tiger Global, as well as entities such as the Ontario Teachers’ Pension Plan.

He has also entered into a number of paid sports sponsorships with parties such as National Basketball Association teams and Major League Baseball. And crypto research firm Chainalysis said it did business with FTX and owed money.

In a separate filing on Saturday, new FTX chief executive John J. Ray said the company would seek sales and other forms of capitalization to ensure as many creditors as possible get their money. He noted that some of FTX’s subsidiaries “have solvent balance sheets, responsible management, and valuable franchises,” which could make this process easier. Some 130 FTX sister companies are part of the bankruptcy filing.

FTX Investors Sue Sam Bankman-Fried, Celebrity Endorsers

When FTX filed for bankruptcy protection on Nov. 11, it marked a stunning fall for a former powerhouse and its 30-year-old co-founder Sam Bankman-Fried. At one point, valued at $32 billion, FTX had become a public symbol of crypto, its ubiquitous advertisements and sports sponsorships signaling to everyday people that cryptocurrency was a safe and accessible investment. Bankman-Fried’s frequent appearances at global conferences and on Capitol Hill have sought to do the same with lawmakers and thought leaders.

The filing shows just how much of an effect these efforts had, as a large number of parties placed their money with FTX – money they will now fight to recover in bankruptcy court.

Dozens of retail clients will join creditors as they wait for the court to divide the assets; many have now had their accounts frozen. In a filing last week, FTX revised the number of potential creditors from 100,000 to 1 million.

However, sorting out corporate obligations could be tricky. In a separate Delaware court filing on Thursday, Ray, a longtime insolvency expert, described a pattern of inadequate documentation.

“The main companies in the Alameda silo and the Ventures silo did not keep complete books and records of their investments and activities,” Ray wrote, referring to certain Bankman-Fried entities, adding, “One of the most prevalent of FTX .com activity in particular is the lack of durable records of decision-making.”

Ray also noted that Bankman-Fried and many of its employees used software that automatically suppressed many of their internal communications.

Even where the procedure will take place is a question. The jurisdiction of the Delaware court is disputed by regulators in the Bahamas, where FTX was based. These authorities want the procedure to continue in another form of bankruptcy in New York.

In his Thursday filing, Ray described a system of “cash management procedural failures” that resulted in FTX not having an “accurate list of bank accounts and account signatories” with which the company did business.

Sam Bankman-Fried charmed Washington. Then his crypto empire imploded.

And he noted a “potential mix” of assets between the Bankman-Fried companies, possibly including its trading arm Alameda Research and FTX.com, which is supposed to operate as a neutral platform for consumers to buy. and sell crypto assets. Alameda personally loaned Bankman-Fried $1 billion, Ray said.

This mix is ​​expected to be one of the main focal points for investigators and regulators as they investigate the former chief executive’s potential wrongdoing. Congress is also turning up the heat. The House Financial Services Committee will hold a hearing next month to probe the company’s collapse.

Freewheeling Crypto businesses have attracted millions. FTX revealed the dangers.

Ray – who has decades of experience overseeing corporate restructurings, including that of Enron – said Thursday there would be plenty for everyone to investigate.

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of reliable financial reporting as has happened here,” he wrote.

He said FTX seemed to be run by a “very small group of inexperienced, unsophisticated and potentially compromised individuals”.

“This situation is unprecedented,” he wrote.

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