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Bankrupt cryptocurrency exchange FTX owes nearly $3.1 billion to top 50 creditors

Bankrupt cryptocurrency exchange FTX owes nearly $3.1 billion to top 50 creditors

Bankrupt cryptocurrency exchange FTX owes nearly $3.1 billion to top 50 creditors
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By Reuters Nov 20, 2022 4:29:15 PM IST (Published)

FTX and its affiliates filed for bankruptcy in Delaware on November 11 in one of the highest-profile crypto blowups, leaving an estimated 1 million customers and other investors facing total losses in the billions of dollars.

Cryptocurrency exchange FTX, which has filed for U.S. bankruptcy court protection, said it owes its 50 biggest creditors nearly $3.1 billion. The exchange owes about $1.45 billion to its top ten creditors, it said in a court filing on Saturday, without naming them.

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FTX and its affiliates filed for bankruptcy in Delaware on November 11 in one of the highest-profile crypto blowups, leaving an estimated 1 million customers and other investors facing total losses in the billions of dollars.
The crypto exchange said on Saturday it has launched a strategic review of its global assets and is preparing for the sale or reorganization of some businesses.
On November 11, the crypto exchange FTX announced that it has filed for Chapter 11 bankruptcy in the US, as its Founder and CEO Sam Bankman-Fried resigned from his role. Sam Bankman-Fried (SBF) founded FTX in 2019 and served as CEO ever since.
John J Ray III has been appointed the new CEO and nearly 130 additional affiliated companies — including FTX US and Alameda Research — have also begun the bankruptcy process, the company said in a statement. Ray III is a Chicago-based lawyer who has served as the restructuring officer in several high-profile bankruptcy cases.
The collapse of FTX sent crypto markets into a tizzy, with most coins seeing double-digit losses. The price of Bitcoin, the largest cryptocurrency by market capitalisation, dropped to 2020 levels, and it was a similar story for Ethereum. The global crypto market cap has also taken a massive hit, falling from $1.02 trillion on November 7 to $847 billion at the time of writing.
The damage was not limited to cryptocurrencies; firms that invested in FTX were also affected by the crash. This is because the embattled exchange halted withdrawals, leaving a large chunk of investor funds frozen. This has led to a domino effect where several other exchanges and DeFi protocols with exposure to FTX have also halted withdrawals.
Although then CEO of FTX, Sam Bankman-Fried tried reassuring investors that FTX was doing just fine, it had little to no effect. Users began withdrawing the holdings masse, and FTX found it hard to fulfil these requests. In a nutshell, the crypto exchange was staring down the barrel of a significant cash flow issue.
From institutional investors writing off their investments to companies facing legal troubles, the FTX collapse will undoubtedly have a long-lasting impact on the crypto space, affecting crypto regulations and laws.
Initial reports suggest that FTX has an $8 billion hole in its financial records and owes money to more than one million creditors. The exchange is also under investigation by the New York Justice Department, the Securities and Exchange Commission (SEC), and law enforcement agencies in the Bahamas, where FTX is headquartered.
The list of lawmakers pursuing the bankrupt exchange and its ex-CEO could grow further in the coming months, and John Ray III will play a pivotal role in how things shape up. However, legal experts expect that the case will take more than three to four years for the case to be settled.
FTX and its affiliates filed for bankruptcy in Delaware on November 11 in one of the highest-profile crypto blowups, leaving an estimated 1 million customers and other investors facing total losses in the billions of dollars.
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