Troubled crypto exchange FTX, which last week filed for bankruptcy, owes its 50 biggest creditors nearly $3.1 billion, the company has said.
FTX’s ordeal, which has been largely attributed to mismanagement of funds, became public about a week ago after former CEO Sam Bankman-Fried began seeking a bailout from rival company Binance.
FTX filed for bankruptcy after Binance backed out of the bailout deal, and it failed to secure funding from elsewhere. This means the company is in huge debt to its investors. FTX said last week it needs $9 billion to settle withdrawal requests.
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In a court filing on Saturday, the company said it owes about $1.45 billion to its top ten creditors, a significant part of its multi-billion dollars debt portfolio.
FTX and its affiliates filed for bankruptcy in Delaware on Nov. 11, throwing its estimated 1 million users into panic and the crypto market into disarray.
According to the company’s separate court filing, a hearing on its first day motions is set for Tuesday. 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, per CNN.
FXT’s ordeal triggered a nosedive in the crypto market, with investors losing more than $200 billion in assets. Bankman-fried has apologized, admitting in a tweet that he “fu…ed up” but he is potentially going to face criminal charges.
1) I'm sorry. That's the biggest thing.
I fucked up, and should have done better.
— SBF (@SBF_FTX) November 10, 2022
There could be more than 1 million creditors in the US cases that are already filed, CNN quoted FTX Group saying, adding that it has been in touch with “dozens” of US and international regulatory agencies including the US Attorney’s Office, the US Securities and Exchange Commission and the Commodity Futures Trading Commission.
With allegations of misconduct increasing, authorities in the Bahamas — where FTX is based — have launched an investigation to determine whether any criminal misconduct occurred related to the company’s implosion, according to a statement by the Royal Bahamas Police Force. The Bahamian authorities have also confiscated cryptocurrency assets held by FTX Digital Markets, The Bahamas-based FTX unit that filed for Chapter 15 bankruptcy protection Tuesday, per Reuters.
In addition, the Securities Commission of The Bahamas announced Thursday night that it had directed the transfer of all digital assets of FTX Digital Markets and that those assets are being transferred to a digital wallet controlled by the Bahamas regulator for “safekeeping.”
FTX’s downfall has further exposed how fragile the crypto industry is, underscoring the need for government regulation. The US authorities are also investigating the matter.