According to the first bankruptcy filing of FTX, more than 1,000,000 creditors are expected to be left in the collapsed crypto exchange FTX, which was distributed across more than 100 companies within the larger group.
According to the filing made at Delaware’s bankruptcy court, Sam Bankman Fried, founder and chief executive of FTX US, resigned on Friday at 4.30 am “after consulting with his legal counsel”.
According to the documents, “FTX was facing a severe liquidity crisis which necessitated that these cases were filed on an emergency basis last Friday.” “Questions arose regarding Mr Bankman Fried’s leadership and how FTX managed its complex array of assets, businesses and businesses.
What caused one of the largest cryptocurrency exchanges in the world to collapse? Read more
According to the filing, the new company leadership has been in touch with many law enforcement agencies, including the US Attorney’s Office and the US Securities and Exchange Commission.
Usually, Delaware bankruptcy courts require companies to file a list with the 20 largest unsecured creditors. However, FTX has asked permission to be different. Because it has more than 100 companies filing bankruptcy, it would like to combine all of its claims into one list, which will include 50 people and organizations.
“These Chapter 11 cases have more than 100,000 creditors. According to the lawyers, these Chapter 11 cases could have more than one million creditors. “The debtors anticipate that there will be overlap between the various debtors’ creditor lists. Certain debtors may also have fewer than twenty significant unsecured creditors.” The company requested permission to send notices by email instead of posting.
Although cryptocurrency exchange depositors may feel the same as bank account holders in some ways, they have much less legal protection. They are simply unsecured creditors in the event of a bankrupt exchange like FTX and can legally be the last creditors to collect funds. This is far more than equity owners and less than bank loans.
