One million creditors impacted following the recent FTX collapse
The recently-collapsed Crypto exchange platform, FTX could have more than 1 million creditors, as regulators open investigations.
FTX outlined a “severe liquidity crisis” in U.S. bankruptcy filings. The whole saga has prompted lawmakers to call for clearer rules on how the industry operates.
“FTX faced a severe liquidity crisis that necessitated the filing of these cases on an emergency basis last Friday,” the documents say. “Questions arose about Mr Bankman-Fried’s leadership and the handling of FTX’s complex array of assets and businesses under his direction.”
The company is in contact with financial regulators and has appointed five independent directors at each of its main companies.
The exchange was one of the world’s largest and filed for bankruptcy protection on Friday.
It’s one of the biggest crypto blowups ever. Panicked traders withdrew a whopping $6 billion from the platform in just 72 hours when the news broke.
FTX founder and former chief executive Sam Bankman-Fried says he expanded the business too quickly and failed to notice signs of trouble.
According to the filings at the bankruptcy court in the state of Delaware, Bankman-Fried stepped down from his role at 4.30am on Friday, following “consultation with his own legal counsel”.
The filing says the new leadership has been in contact with a number of agencies. These include “the U.S. Attorney’s Office, the U.S. Securities and Exchange Commission, and the Commodity Futures Trading Commission.” This is alongside dozens of federal, state and international regulatory agencies.
