Also, the company was still the victim of a hack according to counsel
•The FTX bankruptcy case’s first hearing took place today, with the judge agreeing to continue proceedings in Delaware and keep the names of top creditors redacted for now.
• James Bromley, counsel to FTX’s new management, called the bankruptcy “one of the most abrupt and difficult collapses in the history of corporate America.”
• Bromley described FTX CEO Sam Bankman-Fried as using the exchange as his “personal fiefdom” and said that at the exchange there was a “lack of corporate controls.”
Blog Introduction: The FTX bankruptcy case is one of the most abrupt and difficult corporate collapses in recent history. Today, James Bromley, counsel to FTX’s new management, called the bankruptcy “one of the most difficult collapses in the history of corporate America.” Bromley described FTX CEO Sam Bankman-Fried as using the exchange as his “personal fiefdom” and said that at the exchange there was a “lack of corporate controls.” Here’s what we know so far about this ongoing case.
FTX is a cryptocurrency derivatives exchange launched in 2019. The exchange offers futures contracts and options on a range of cryptocurrencies, including Bitcoin, Ethereum, Litecoin, and XRP. As of February 2021, FTX was the third-largest cryptocurrency derivatives exchange by trading volume.
The FTX Bankruptcy Case
FTX, a cryptocurrency derivatives exchange, filed for bankruptcy this morning. In the filing, they listed over $3 billion in liabilities and less than $50 million in assets. The top creditors are owed a total of $3.1 billion, but their identities have been redacted for now as the judge has allowed the names and addresses to be kept secret.
Judge Dorsey made the following statement:
“I think it’s important that we protect those individuals who are seeking to participate,” Judge Dorsey said, referring to the creditors. “
The judge has also agreed to continue proceedings in Delaware and has ordered FTX to provide more information about its restructuring plan. Regulators in the Bahamas wanted to take control of the bankruptcy but a filing by FTX alleged “credible evidence” that the Bahamian government directed unauthorized access to the funds of clients as several wallets were drained of funds the day the company filed for bankruptcy.
James Bromley the counsel for FTX stated that some of those transfers were actually still part of a hack despite the Bahamian government claiming responsibility. Bromley maintains a “substantial amount” of the assets are still gone and have been stolen
Bromley went on the state the collapse of FTX was one of the “most abrupt and difficult collapses in all of corporate American history” stating that the ex-CEO Sam Bankman-Fried used the company as a personal piggy bank and had a company with no corporate control.
FTX is one of the largest cryptocurrency exchanges and its bankruptcy is sure to have ripple effects throughout the industry. This case is being closely watched by crypto enthusiasts and investors around the world. More details are sure to emerge in the coming days and weeks.
According to court documents, FTX owes its many unsecured creditors approximately $3.1 billion. The creditors are owed money for services rendered prior to the company’s bankruptcy filing. A large portion of the debt is owed to employees of FTX who have not been paid their salaries for February 2021. Other creditors include computer hardware suppliers and advertising agencies.
Currently, there are still 260 employees remaining at the office.
The company was using client money to make risky investment bets through Alameda Research. The company was recently forced to admit there were no one-to-one reserves of customer assets and this led to the freezing of withdrawals and the subsequent bankruptcy filing.
The FTX bankruptcy case is ongoing and developing rapidly. Stay tuned to this blog for updates on this case as they become available.