Collapsed Crypto Exchange FTX Owes $3 Billion to Top 50 Creditors: Filing
This photo illustration shows a smart phone screen displaying the logo of FTX, the crypto exchange platform, with a screen showing the FTX website in the background in Arlington, Virginia on February 10, 2022 .
Olivier Douliery | AFP | Getty Images
Struggling cryptocurrency exchange FTX owes creditors north of $3 billion, according to a new filing this weekend.
A list of FTX’s top 50 unsecured creditors, which excludes their names and other identifiable information, shows that the largest of them owes more than $226 million. The second largest unsecured creditor is claiming more than $203 million in unpaid debt from FTX.
In total, unsecured claims – labeled as such because they were not secured by guarantees – amount to $3.1 billion. FTX may have more than a million creditors, according to a previous bankruptcy filing.
Disgraced FTX founder Sam Bankman-Fried stepped down as CEO earlier this month as the company filed for Chapter 11 bankruptcy.
FTX, once valued at $32 billion, collapsed within days after the CEO of rival firm Binance said his exchange would liquidate its FTT tokens. FTT, the native token of FTX, plunged as a result, leading to a liquidity crunch at FTX.
The Securities and Exchange Commission and the Department of Justice are reportedly investigating what happened.
Bitcoin and other cryptocurrencies were trading lower on Monday. Over $260 billion has been wiped off the value of the crypto market since Zhao’s tweet on Nov. 6.
Bankman-Fried has been accused by his peers in the crypto industry of gross mismanagement and fraud.
His exchange allegedly used client funds to make risky trades, according to earlier reports from CNBC.
In a damning account of FTX’s demise last week, its new CEO, John Ray III, said in a filing that many FTX Group companies “lack proper corporate governance.”
On Thursday, FTX said it had credible evidence that the exchange had transferred assets into the custody of the Bahamian government.
The company’s new boss is now looking to sell or restructure his global empire.
Neither FTX nor Bankman-Fried were available for comment when contacted by CNBC on Monday.
Crypto investors have been burned by a number of high-profile failures this year, which have had ripple effects. Earlier this year, the collapse of the so-called stablecoin terraUSD impacted a number of companies and contributed to the downfall of leading hedge fund Three Arrows Capital.
The latest market crash has raised questions about the opacity of big business in crypto, an industry often touted as more decentralized and transparent than traditional finance.
Bank of England Deputy Governor Jon Cunliffe said the FTX debacle has given regulators greater momentum to act on crypto.
“We must not wait until it is big and connected to develop the regulatory frameworks needed to prevent a crypto shock that could have a much larger destabilizing impact,” Cunliffe said in a speech Monday at Warwick Business School.