FTX, founded by Sam Bankman-Fried, recently submitted a list of creditors, 116 page long, to the U.S. Bankruptcy Court, District of Delaware on 25th January 2023.
Who are among the FTX’s long list of creditors?
FTX owes money to big business houses, banks, tech players, crypto exchanges, web3 companies. Some of them are listed below:
- Business giants: Goldman Sachs Group Inc., JPMorgan Chase & Co. and Wells Fargo & Co.
- News agencies: The New York Times, Wall Street Journal, Fortune, CoinDesk
- Banks: Deutsche Bank AG, HSBC Bank and MUFG Bank
- Tech players: Apple, Netflix, Amazon, Meta Platforms Inc., Alphabet Inc., LinkedIn, Microsoft and Twitter
- Crypto exchanges: Coinbase, Binance
- Web3 companies: Galaxy Digital, Yuga Labs, Circle, Bittrex, Sky Mavis, Chainalysis, Messari
- Governments agencies: USA, Japan, Australia, and Hong Kong
- U.S. Government agencies: IRS, FinCEN, and State tax collectors from different states.
- Universities : Stanford University
How much money does FTX owes to its creditors?
The total amount money FTX owes to its top 50 creditors and customers is US$ 3.1 billion. There are 9.7 million customers whose funds are stuck at the failed exchange. The names of these customers have been redacted from the list as per FTX lawyer’s request. The list didn’t mention the amount of money each party is owed.
Have any recoveries been made by FTX till now?
Attorneys told a Delaware bankruptcy judge that a recovery of $5 billion of liquid assets, including cash, crypto and securities, have been made so far.
What is the future ahead for FTX? What are the steps being taken by the new CEO of FTX for recovery?
In an interview with The Wall Street Journal, FTX’s new CEO John Ray III said he’s focussing on finding the possibilities of reviving the exchange while aiming at resuming its normal operations during its bankruptcy process. He stated that his prime focus was locating and securing assets, investigating claims and cooperating with regulatory investigations conducted in the United States and abroad.Moreover, a task group has been formed to look into the viability of reviving the company’s main international exchange, FTX.com. However, securing assets and distributing them to customers and creditors could be a longer process.
Is there any hope for the customers to get their money back?
In case customers had any holdings with FTX, they are more likely to get their funds recovered depending on how many assets FTX are left with and how much it owes to its customers.
Moreover, customers have no other option than to rely on the bankruptcy process only because unlike in traditional bank failures, the Federal Deposit Insurance Corporation (FDIC) will not intervene here to protect customer deposits.
What is a Bankruptcy process which FTX filed for in November 2022?
Bankruptcy is a legal process initiated when someone, whether a person or business, is not able to repay outstanding debts or obligations.The process is initiated when a petition is filed by the debtor, followed by evaluation and measurement of each and every asset of the debtor which may be used to repay the outstanding debt.Federal Courts handle the cases of bankruptcy as per the rules defined in the U.S. Bankruptcy Code.The type of bankruptcy is defined as per the Chapters of the US Bankruptcy Code.In the case of FTX, the bankruptcy has been filed as per Chapter 11 of the U.S. Bankruptcy Code.Although bankruptcy allows a new beginning to an individual or organization but at the same time, makes it difficult to borrow money in future as the credit report stays in records for a number of years.
How experienced is FTX’s new CEO, John Ray III? What’s his career background?
Mr. Ray is a lawyer and an expert who has decades of experience in restructuring the companies which are facing fall outs. He came to the light during his tenure as Chief Executive of Enron when it was in bankruptcy and recovered around $828 million for creditors in 2001.
Recently, he took over as CEO when FTX filed for bankruptcy protection. Under his new management, FTX has located and secured $5 billion in cryptocurrency, which is apparently “only a fraction” of the crypto assets the company is focusing to regain for its customers and creditors.
Who is handling the cryptocurrency (digital) assets of FTX?
The Cryptocurrency assets of FTX were taken over by the Securities Commission of the Bahamas (SCB) on November 18 by instructing Bankman-Fried to move crypto assets to the regulator’s wallet with an aim to protect creditors’ interests.