The Number of FTX Creditors Could Exceed One Million

The failed cryptocurrency trading platform FTX has more than 100,000 creditors, and the number could exceed one million, according to documents filed in the bankruptcy case in the U.S.

Specifically, FTX filed for creditor protection in U.S. court last Friday after panicked traders withdrew more than six million dollars from the platform in just three days, and competitor Binance backed out of a rescue deal, Reuters notes. Binance had submitted a letter of intent to purchase FTX but withdrew it the very next day.

Last weekend, CEO Changpeng Zhao announced on Twitter that Binance would no longer accept deposits in FTX’s cryptocurrency FTT, suggesting that other companies in the sector follow their example.

100,000 Creditors

‘FTX faced a serious liquidity crisis that forced it to urgently file for creditor protection last Friday,’ documents submitted to the U.S. court show. The bankruptcy proceedings involve more than one hundred thousand creditors, but the number could exceed one million, as FTX requested group members not to submit lists of major creditors separately but to consolidate them into a single list, according to the filing.

– Questions have been raised about the leadership of (CEO Sam) Bankman-Fried and the management of the complex array of FTX’s assets and operations under his leadership – it adds.

FTX founder and former CEO Sam Bankman-Fried stated that he expanded the business too quickly, claiming he did not notice signs of trouble on the digital platform, whose collapse caused shock in the crypto sector, the New York Times reported on Monday evening.

The financial regulator of the Bahamas, where FTX is headquartered, suspects the company of misappropriating client funds, announcing on Monday that the Supreme Court appointed two bankruptcy administrators, partners of U.S. PricewaterhouseCoopers (PwC).

Donations to Politicians and Lobbying

FTX was founded in 2019 and had over one million users last year, ranking third in transaction value in cryptocurrencies. In January of this year, its market value was estimated at 32 billion dollars.

Its revenue grew from 10 million dollars in 2019 to one billion dollars in 2021, processing about 10 percent of global cryptocurrency transactions this year, according to a document from September.

Its logo could be found on sports arenas in Miami and on the jerseys of clubs in the American baseball league, promoted by stars like Tom Brady and Gisele Bundchen. None of them have commented on this claim by Reuters.

Bankman-Fried was a regular visitor to Washington, donating millions of dollars to politicians and lobbying in Congress on issues related to cryptocurrency markets, Reuters notes.

The unexpected collapse of FTX, once a rising star in the crypto sector, has triggered a wave of investigations by financial regulators and other supervisory bodies around the world. Investigations have also been initiated by the U.S. Department of Justice, the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC), a source informed Reuters.