NewsBusiness

Over 1 Million Creditors Could Have Claims in FTX Bankruptcy

New filings also confirm FTX Exchange’s new leadership is in touch with regulators and dealing with Friday’s hack.

2 min read
Another firm files for bankruptcy. Image: Shutterstock

More than a million creditors could have claims against bankrupt exchange FTX, new court filings reveal.

In a document submitted to bankruptcy court in Delaware, FTX’s lawyers argued for a modification to usual rules to reflect the large number of entities who are owed money in the case.

“As set forth in the Debtors' petitions, there are over one hundred thousand creditors in these Chapter 11 Cases,” the filing reads. “In fact, there could be more than one million creditors in these Chapter 11 Cases.”

Bankruptcy rules usually stipulate that a debtor should file a list of the 20 people who hold the largest unsecured claims against it, but FTX’s lawyers have proposed instead submitting a “Top 50 List” of creditors by Friday.

The proposal also suggests filing just one list to cover all of FTX’s various entities, including Alameda Research and several regional subsidiaries, since many creditors would overlap between them.

FTX comes under new leadership

The court filings also provide an insight into the first days on the job for FTX’s new chief executive, John J. Ray III, who was appointed as FTX and its related companies filed for bankruptcy last week.

“Immediately upon appointment, Mr. Ray began working with FTX's external legal, turnaround, cybersecurity and forensic investigative advisors to secure customer and debtor assets around the world, including by removing trading and withdrawal functionality on the exchanges and moving as many digital assets as possible to a new cold wallet custodian,” the document says.

Alongside all this, he had to respond to a cyberattack that occurred on the same day as the bankruptcy filings, draining hundreds of millions of dollars from wallets belonging to FTX.

Meanwhile, FTX’s representatives have been in contact with a cadre of regulatory authorities, including in the U.S. with the Attorney’s Office, the Securities and Exchange Commission, and the Commodity Futures Trading Commission.

Stay on top of crypto news, get daily updates in your inbox.