FTX Bankruptcy Filing Says it May Have Over 1M Creditors
- A new document filed with the bankruptcy court in Delaware shows that troubled crypto exchange FTX may have more than one million creditors.
- FTX has also filed a motion to group its more than 100 entities that are filing for bankruptcy together, rather than treating them as individual cases.
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Crypto exchange FTX, which filed for Chapter 11 bankruptcy protection last week, may have more than a million creditors, documents filed with the Delaware bankruptcy court on 14 November show.
Late on Monday, FTX filed more than 100 dockets for various companies related to the exchange — including Alameda Research, West Realm Shires, Clifton Bay Investments, and many more — that will be going through a bankruptcy process. As the number of companies was too large, FTX also filed a motion to group all the entities and jointly administer them under the FTX group umbrella, as opposed to individualizing them on a case-by-case basis.
The fallen exchange — which on Friday said it had between $10 and $50 billion in assets and liabilities, and over 100,000 creditors — further proposed that instead of creating a list of the top 20 creditors for each individual company, it can instead create a consolidated list of the top 50 creditors. The Monday filing also revealed that the total number of creditors of the entire FTX Group could number more than 1 million. The document reads:
“As set forth in the Debtors’ petitions, there are over one hundred thousand creditors in these Chapter 11 Cases. In fact, there could be more than one million creditors in these Chapter 11 Cases. As such, the Debtors submit that cause exists to modify that requirement such that the Debtors will file a consolidated list of their top 50 creditors.”
The FTX team also requested to be allowed to serve all the bankruptcy notices to creditors through email instead to their residences, noting that its customers interacted with the exchange mainly online, and that their emails were already in the system. Surprisingly, the filing also mentioned the hack on Friday, claiming that FTX has since contacted the U.S. Attorney’s Office, the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission among others.
On 11 November, over $600 million were transferred out of the insolvent crypto exchange in a number of suspicious transactions. Out of all the transactions it appears that one hacker — who is suspected to be an insider — withdrew close to $350 million worth of tokens to his own wallets, and later used various DEX’s — such as Uniswap, 1inch, Cowswap, and others — to try and dump his stolen tokens. Crypto intelligence platform Arkham Intelligence noted that the attacker is not very sophisticated, and appears to be in a panic based on his blockchain transactions. One of his biggest mistakes was to use his verified Kraken account to send enough TRX tokens to cover his transaction fees, with the exchange’s CSO noting that they were aware of the user’s identity.
- The investment team behind Temasek’s $275 million investment into FTX prior to its collapse “took collective accountability” and had their compensation cut.
- While the company was the second largest outside investor in FTX, it was one of the first to write off its entire investment only days after the collapse of the exchange.
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- The IRS filed its claims against FTX under the “Admin Priority” classification, which could allow it to supersede the claims of other creditors in the bankruptcy case.
- The largest of the claims is against Alameda Research LLC, with the IRS claiming around $20 billion in partnership taxes and close to $400 million in payroll taxes.
- The cryptocurrency exchange is estimated to have more than 100,000 creditors, and between $500 million and $1 billion in both assets and liabilities.
- The Chapter 11 filing came less than a month after the U.S. SEC filed charges against Bittrex and its former CEO, claiming they were operating an unregistered securities exchange.