Over a million people could have lost their money The collapse of the virtual currency exchange FTXbankruptcy filing revealed.
The digital coin exchange, valued at $32 billion (£27 billion) just over a week ago, Collapsed last week after experiencing surge in withdrawals could not be fulfilled.
In its initial filing as part of its Chapter 11 bankruptcy lawsuit in Delaware court, attorneys for FTX said: In reality, there may be over a million creditors. “
FTX, a Bahamas-based cryptocurrency exchange founded by Sam Bankman-Fried, Accused of sharing client funds with sister hedge fund Alameda Research, endorses risky bets on cryptocurrency investments. FTX gave Alameda his $10 billion loan, The New York Times reported.
FTX consisted of a corporate web with over 130 registered entities. The company has grown rapidly to become the world’s second largest digital coin exchange where customers buy and sell Bitcoin and other cryptocurrencies.
But questions arose about the company’s financial practices, prompting a flood of withdrawals of $5 billion in a single day.
In its bankruptcy filing, FTX lawyers wrote:
“Questions have been raised about Mr Bankman-Fried’s leadership and the handling of FTX’s complex array of assets and businesses under his command.”
At 4:30 am Friday, Bankman-Fried, known as SBF, agreed to step down as CEO. John Jay Ray, the US restructuring expert who led failed energy company Enron to bankruptcy, was appointed to head the company.
Financial documents prepared for potential investors show FTX has $9 billion in debt and only $900 million in liquid assets, the Financial Times reported.
Ray has appointed five independent directors to lead the various businesses of FTX.
FTX A cyberattack hit right after filing for bankruptcy, hundreds of millions of dollars worth of crypto assets have been removed from exchanges. The company began moving its remaining assets into a “cold wallet”. That meant removing them from the company’s digital exchange and placing them in non-internet-connected storage.
The bankruptcy filing confirmed that FTX faces scrutiny from multiple regulators, including the U.S. Securities and Exchange Commission and “dozens” of U.S. state and international regulators.
It is unclear what value creditors will recover from the complex bankruptcy proceedings. “The debtor is committed to maximizing stakeholder value,” the filing reads.
FTX and its sister business, Alameda, were run from a $40 million penthouse in the Bahamas by 30-year-old Bankman-Fried and a group of close friends.
