A new official bankruptcy filing released on Tuesday has exposed the severity of the FTX liquidity crunch. According to the document, the troubled Bahamian cryptocurrency exchange FTX may have up to 1 million creditors.
The document which was filed to the federal court database system PACER outlines what transpired in the last days before the collapse of the exchange.
Based on the published filing “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.”
FTX Works With Regulators For Bankruptcy Process
Also, FTX declared that it is already in contact with financial regulators and has appointed five independent directors for its core companies including Alameda Research. While all these are going on, the newly appointed Chief Executive Officer (CEO) and bankruptcy overseer expert John J. Ray III is working with other legal experts.
He has also contacted cybersecurity and forensics advisers who will supervise the bankruptcy proceedings for all the companies and subsidiaries involved.
“FTX faced a severe liquidity crisis that necessitated the filing of these cases on an emergency basis last Friday,” the filing outlined “Questions arose about Mr. Bankman-Fried’s leadership and the handling of FTX’s complex array of assets and businesses under his direction.”
Altogether, FTX filed about 130 dockets for all its companies and subsidiaries. Alameda Research which held a large percentage of the FTX token (FTT) was also included. West Realm Shires, a business entity in the United States that operates as FTX in some jurisdictions, and Clifton Bay Investments had their bankruptcy filings too.
However, FTX filed for a motion that would regard all the companies as a single entity rather than treat each one as a separate entity.
Meanwhile, after Binance pulled out from its acquisition with FTX, the leading digital asset firm went ahead to float an industry recovery fund to help stabilize the industry. Binance says it will use the fund to help strong companies who are faced with liquidity crisis.