On Saturday, in a court filing, cryptocurrency exchange FTX said that it owes 50 creditors roughly $3.1 billion. The exchange, which filed for bankruptcy on November 11 in Delaware, USA, also stated that its top 10 creditors were owed nearly $1.45 billion. The filing did not name the creditors and the companies on the redacted list are reportedly owed amounts between $21 million to $226 million. Reuters was the first to report the news.
Sam Bankman-Fried resigned as the CEO as the cryptocurrency exchange imploded months after it was valued at $32 billion. It was funded by big names of global financial markets such as Sequoia, Temasek, Paradigm, Soft Bank Group Corp. and more. It also received funding from global hedge funds such as Tiger Global and Third Point, much before its bankruptcy filing. Celebrity couple Tom Brady and Gisele Bundchen also had a sizable investment in FTX.
The bankruptcy will expose 1 million creditors to bear losses and not only the top 50 ones. The bankruptcy cleanup is being orchestrated by an experienced new CEO John Ray III. Although he oversaw one of the greatest cleanups—Enron, the restructuring expert said that FTX one was far worse.
The new FTX CEO also described what was happening at the company as “unprecedented chaos.” It will be difficult for the company to borrow new money. John Ray III said that it would look to make a sale or restructure the company.
Some experts say that the whole process could continue for up to three years but the company said that they had not set a completion date, as yet. FTX had lack of controls, no checks, and balances as well as gaps in its accounting system.
FTX was the world’s second largest crypto exchange. Its collapse has had a domino effect on other smaller companies. It also led to a collapse in the value of crypto currencies that have already seen a downturn this year. Some companies such as Sequoia and the Ontario Teachers’ Pension Plan have written off their losses on FTX and marked them to $0, according to reports. The long term effects of the collapse of FTX on the crypto market are yet to be seen.
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