Global investigators strike as FTX collapse leaves 1 million potential creditors

The collapse of Sam Bankman-Fried’s crypto empire sparked a massive global investigation, with dozens of authorities swarming the company as lawyers warned there could be 1 million creditors in bankruptcy proceedings.

FTX said in court filings that it has been in contact with US federal prosecutors, the Securities and Exchange Commission, the Commodity Futures Trading Commission and “dozens of federal and state regulators” state and international” within three days of crypto exchanges and more than 100 affiliated companies filing for Chapter 11 bankruptcy in Delaware.

Companies face at least 100,000 creditors, but that number could rise to more than 1 million, according to the filing.

“There is considerable interest in these events among regulators around the world,” the filing said.

The statements provide new insights into the vast scale and complexity of digital asset group Bankman-Fried’s multi-billion dollar bankruptcy, as well as the scrutiny of legal scrutiny. and regulations for the businesses of the 30-year-old former billionaire.

“The events that occurred with FTX over the past week are unprecedented,” the court filing said. “Just over a week ago, FTX, led by co-founder Sam Bankman-Fried, was considered one of the most innovative and respected companies in the crypto industry.”

The filing said Bankman-Fried agreed to step down as chief executive at 4:30 a.m. Friday after a late-night meeting with its attorneys.

Restructuring expert John Ray, known for his work at Enron, took over the company. Five independent directors have been appointed to oversee various affiliated companies, led by former US federal judge Joseph J Farnan Jr, after attorney Stephen Neal stepped down from his board position. .

The U.S. filing comes after financial regulators in the Bahamas appointed liquidators to run a key FTX institution as the country’s authorities seek to “protect the interests of our customers, owners, and clients.” debt and other stakeholders globally”.

The Bahamas Securities Commission said on Monday that it had won court approval to appoint two partners from PwC, one based in the Bahamas office and the second in Hong Kong, to oversees the dissolution of FTX Digital Markets, an entity at the heart of the cryptocurrency group’s vast trading platform.

Authorities in the Caribbean country, where Bankman-Fried lives, are investigating FTX, which used its Nassau facility to build a crypto derivatives trading operation that accepts funds from thousands of customers around the world.

US filings confirm FTX was “hacked” on Friday. Blockchain research firm Elliptic estimates $477 million has been stolen in a hack of the exchange.

The company also hired “investigative, forensic and cybersecurity experts” to work with attorneys from Sullivan & Cromwell, FTX’s longtime legal counsel, who advised the company on the process. bankruptcy and worked with FTX’s general counsel, Ryne Miller, who had previously worked for the company.

Alvarez & Marsal has been hired as a financial advisor. A team from the consulting firm was “on the ground” [and] is considering [companies’] books and records and assist in bankruptcy preparation,” it said.

The U.S. Securities and Exchange Commission recently expanded its investigation into FTX, including investigating crypto lending products as well as customer money management, according to a person familiar with the matter. this.

FTX said in the filing that an expedited move to bankruptcy was necessary to “secure and arrange its assets, and . . . to reorganize or sell FTX’s complex business, investments and assets around the world for the benefit of its stakeholders.”


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