FTX companies owe more than $3 billion to the largest creditors

Sam Bankman-Fried’s companies owe more than $3 billion to their largest creditors, according to court documents, as the cryptocurrency group’s massive bankruptcy process gains momentum.

The crypto exchange FTX and affiliates founded by Bankman-Fried on Sunday submitted a list of their 50 largest creditors, all of whom are clients and owe more than $20 million, with two owing more than $200 million. The companies’ total liabilities are estimated at more than $10 billion, according to previous documents, and it could have more than 1 million creditors.

Publication of the list as part of Delaware’s Chapter 11 bankruptcy proceedings was delayed as bankruptcy practitioners struggled to find reliable data on the FTX group, which collapsed earlier this month after a liquidity crisis and allegations that it had misused client funds .

John Ray III, the bankruptcy expert who took control of the company and oversaw Enron’s liquidation, said in previous documents that he had never seen “such a complete failure of corporate controls and such a complete absence of reliable financial information.” ” had seen.

FTX said it may need to update list of creditors as ‘investigation'[s] continue with respect to stated amounts, including payments that may have been made but not yet reflected on the [company’s] books and archives”.

The filings show that 10 clients owe more than $100 million from FTX. The top 50 creditors, whose names have been redacted in the filing, all owe more than $20 million. FTX has said in previous lawsuits that disclosing the names of its major account holders would be detrimental to competition.

FTX’s clients included major financial groups trading cryptocurrencies, such as hedge funds. Unlike traditional exchanges, cryptocurrency trading platforms typically also take custody of client funds. Customers who were unable to withdraw their funds before the company stopped payouts now have to wait a long time to get their funds back.

In other recent cryptocurrency bankruptcies involving Voyager Digital and Celsius Networks, a key legal question has been whether account holders are unsecured creditors or have higher priority status in determining who receives reparations first. Another question likely to arise is whether account holders who have withdrawn their funds just prior to filing for bankruptcy are subject to chargebacks.

The stock market collapse, widely regarded as one of the most reliable venues for digital assets until this month, has fueled fears that other companies are at risk from their exposure to FTX and a crisis of confidence in the market.

Shares of Silvergate, a US bank known for its involvement in cryptocurrencies, fell about 30 percent last week. The bank has said it has “the liquidity and capital ratios to support volatility”.

Hedge fund Galois Capital told clients earlier this month that it had “about half of our capital tied up in FTX.” Based on Galois’ assets under management in June, that could be about $100 million.

In another filing on Saturday, FTX said the company had 330 employees around the world but was experiencing “extraordinary attrition.” It requested the court’s permission to continue paying the remaining employees it said were critical to the bankruptcy case.

FTX disclosed in court filings that new CEO Ray is billing his time at $1,300 an hour and that he has received an advance payment of $200,000. It also brought in three new executives to assist with the bankruptcy, including a chief financial officer.

A first court hearing is scheduled for Tuesday morning in federal bankruptcy court in Delaware before Judge John Dorsey.

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