FTX has 10 times more creditors than originally expected, according to new bankruptcy filing

When crypto exchange FTX filed for bankruptcy last week, it said it owed money to around 100,000 creditors. A Tuesday filing puts that number at more than 1 million.

The company’s attorneys said in the file that the matter is complex and involves more than a hundred debtor entities on FTX’s side and more than a million creditors, mainly customers of FTX.

While the bankruptcy code would typically require FTX and its associated companies to file a list of the top 20 creditors for each debtor entity, such as FTX, FTX US and Alameda Research, its attorneys sought permission to file a consolidated list of the top 50. main creditors. people and organizations due because businesses overlap so much. If the application is approved, the company plans to file a top 50 list by Friday.

“Compiling separate creditor lists for each individual debtor would consume an inordinate amount of debtors’ limited time and resources at this critical time,” the filing reads.

Following news of FTX’s bankruptcy, the company’s attorneys also said they have been in contact with dozens of regulatory agencies, including the Securities and Exchange Commission, Commodity Futures Trading Commission and others. federal, state and international agencies.

“There is substantial interest in these events among regulators around the world,” the filing said.

Last week, FTX founder and CEO Sam Bankman-Fried resigned and the company was named CEO John J. Ray III, who helped creditors recover funds from troubled companies, including Enron. It’s a role he hopes to return to as the managing director of the more than 100 FTX-associated entities.

FTX’s bankruptcy comes after two other crypto companies, Celsius and Voyager Digital, filed for bankruptcy earlier this year, likely embroiling their customers in lengthy processes as they seek a refund. In the Celsius case, customers have been designated as “unsecured creditors” while in the Voyager case, the plaintiffs were “intoxicated”. Neither designation guarantees that customers will get their money back quickly, if at all.

After a week-long saga in which FTX faced a liquidity crunch, the company thought it had found salvation by getting bought out by rival crypto exchange Binance. But after CEO Changpeng “CZ” Zhao initially agreed to buy FTX, CZ pulled out of the dealclaiming that “FTX’s problems are beyond our control or our ability to help you”.

The SEC and the Department of Justice are turning now as some have accused SBF of mismanaging FTX client funds. Bankman-Fried denied the allegations.

As FTX’s attorneys noted in Tuesday’s filing, “The events that have befallen FTX over the past week are unprecedented.”

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