Regulators Begin Cleanup As Bankruptcy Filing Reveals Chaos At Sam Bankman-Fried’s FTX Crypto Exchange

Collapsed crypto exchange FTX outlined a “severe liquidity crunch” in US bankruptcy filings that said the group could have more than a million creditors as regulators launched investigations and lawmakers demanded clearer rules on how the industry operates.

TX’s filing with a US bankruptcy court, released late Monday in the US, says it is in contact with financial regulators and has appointed five new independent directors at each of its principal businesses, including its sister trading firm Alameda Research.

The exchange, which was among the largest in the world, filed for bankruptcy protection on Friday in one of the most high-profile crypto explosions after panicked traders traded $6 billion in just 72 hours.

“FTX faced a severe liquidity crisis that necessitated the filing of these cases on an emergency basis last Friday,” the court filing said.

“Questions have been raised about Mr. Bankman-Fried’s leadership and the handling of FTX’s complex range of assets and businesses under his leadership.”

FTX founder and former CEO, Sam Bankman -Fried said he grew his business too quickly and failed to notice signs of trouble in the stock market, the fall of which caused a shock Ripples through the crypto industry, T The New York Times reported late Monday.

The bankruptcy proceedings involve more than 100,000 creditors, although that number could exceed one million, the filings say, as FTX required several FTX Group companies to file a consolidated list of major creditors, rather than separate ones.

The filings also confirmed that FTX responded to a cyberattack on Nov. 11 after saying on Saturday it had seen “unauthorized transactions” on its platform.

FTX has hired Alvarez & Marsal as financial advisors, and the company said it has been in contact with the US Attorney’s Office, the SEC, the CFTC and dozens of federal, state and international regulators over the past 72 hours.

The sudden collapse of Bahamas-based FTX, once a crypto industry rising star valued at $32 billion in January, has sparked investigations by financial regulators and other regulators around the world.

The Securities Commission of the Bahamas said in a statement also Monday that two PwC partners have been approved by the Supreme Court as joint provisional liquidators for FTX.

The commission said it has moved to use its regulatory powers to protect the interests of customers and creditors of FTX Digital Markets (a local entity of the exchange) “given the scale, urgency and international implications of the unfolding events.”

She said she will work with other regulators. Several global regulators have sought to remove licenses from local FTX entities and are investigating the company.

Investigations by the US Department of Justice, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are also underway, a source with knowledge of the investigations told Reuters.

The governor of the French central bank, Francois Villeroy de Galhau, called for a global regulatory response to the financial uncertainty caused by the crypto market in a speech in Tokyo.

Crypto industry peers and partners have been quick to distance themselves from FTX, proving their sound finances, although several have disclosed that they are exposed to FTX for holding tokens on the exchange or owning FTX’s native token, FTT, the most recent week has fallen by 94 percent.

Bitcoin is down 19 percent this month, and other tokens, like those linked to the Solana blockchain, once praised by Mr Bankman-Fried, have also suffered.

“One has to wonder why prices aren’t already lower than they are,” crypto liquidity provider B2C2 said in a note to clients, adding that “credit worries are now trumping any other risk and participants are focused on selling assets.” to be deferred from the stock exchanges”.

https://www.independent.ie/business/world/regulators-start-clean-up-as-bankruptcy-filings-reveal-chaos-at-sam-bankman-frieds-ftx-crypto-exchange-42147960.html Regulators Begin Cleanup As Bankruptcy Filing Reveals Chaos At Sam Bankman-Fried’s FTX Crypto Exchange

Fry Electronics Team

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