Collapsed cryptocurrency exchange FTX outlined a “severe liquidity crisis” in US bankruptcy filings, which said the group could have more than 1 million creditors, as regulators open investigations and the crypto market worsens spread with the Wall Street Journal reporting that BlockFi was planning layoffs and a possible bankruptcy filing.
In a filing filed in a US bankruptcy court on Monday, FTX said it was in contact with dozens of global regulators and had appointed five new independent directors at each of its major companies, including its trading company Alameda Research.
The exchange, which was among the world’s biggest, filed for bankruptcy on Friday in one of the biggest meltdowns in the cryptocurrency industry, after traders withdrew $6 billion from the platform in three days and rival exchange Binance pulled out. a redemption agreement.
“FTX faced a serious liquidity crisis that required the filing of these cases on an emergency basis last Friday,” the court filing said.
FTX’s bankruptcy process includes more than 100,000 creditors, and that number could exceed 1 million, according to the documents. The figures were released when FTX requested that several of its own group companies submit a consolidated list of major creditors, rather than separate lists.
The documents also confirm that FTX responded to a cyberattack on Nov. 11, after it said on Saturday that it had seen “unauthorized transactions” on its platform.
FTX hired Alvarez & Marsal as a financial advisor and said it is in contact with the US Attorney’s Office, the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and dozens of federal, state and international regulatory agencies in the last 72 hours.
Other crypto industry peers and partners were quick to distance themselves from FTX and publicize its solid financials, although some, including US cryptocurrency exchange Genesis Trading, have disclosed that they are exposed to FTX, either by holding tokens on the exchange or by owning the FTX’s native token, FTT.
FTT is down around 94% over the past week, while bitcoin has lost 22%.
Cryptocurrency lender BlockFi, which previously acknowledged having significant exposure to FTX, plans to lay off workers as it prepares to file for bankruptcy, the Wall Street Journal reported.
regulatory examination
The sudden collapse of FTX, once seen as a mainstay of the crypto industry with a valuation of $32 billion in January, has sparked investigations by financial regulators and other oversight bodies around the world.
Several global regulators have stripped local FTX units of licenses and are investigating the company, and investigations by the US Department of Justice, SEC and CFTC are also ongoing, a source with knowledge of the investigations told Reuters.
Some argued that regulators should have acted sooner.
(Additional reporting by Anshuman Daga in Singapore; Writing by Vidya Ranganathan, Alun John and John McCrank)
Source: CNN Brasil
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