Fallen cryptocurrency exchange FTX confirmed a massive liquidity crisis in the United States bankruptcy filings, which revealed that the group might have over one million creditors. That comes as regulators lick-started investigations while lawmakers called for clear regulations on how the crypto space operates.
FTX’s late Monday bankruptcy filing to a United States court indicated that the trading platform was engaging financial regulators. Also, it highlighted five new ‘independent’ directors at its primary firms, including Alameda Research, its sibling trading company.
The crypto exchange, which remained among the leading globally, filed for insolvency on Friday following a massive blowup after panicked market participants withdrew $6 billion from the site within three days. And a competitor exchange Binance halted a deal to rescue the collapsed FTX.
The court filing indicated that FTX encountered severe liquidity issues that forced it to file the cases as an emergency last Friday. Meanwhile, questions emerged about Sam Bankman-Fried’s handling of the exchange’s multiple assets and complex businesses.
FTX’s former CEO and founder, Sam Bankman-Fried, stated that he grew the business too quickly and could not notice signals of trouble at FTX, whose collapse saw the entire crypto space tumbling. That’s according to Monday’s New York Times news.
The bankruptcy case involves over 100K creditors. And the filings indicated that this figure might exceed one million as the exchange requested many FTX group firms file one list of leading creditors rather than individual ones.
The filings added that FTX reacted to an attack on 11 November after confirming on Saturday that it witnessed unauthorized transactions on the exchange. FTX has employed Alvarez and Marsal as a fiscal advisor and confirmed engaging the United States Attorney’s Office, CFTC, SEC, and several federal, international, and state regulatory bodies within the last 72 hours.
Global Crypto Regulation
The sudden fall of FTX, once a leading platform with its valuation totaling $32 billion as of January, triggered investigations by monetary regulators and global supervisory bodies. Moreover, the SEC of Bahamas confirmed the approval (by the Supreme Court) of two PwC partners as FTX’s combined provisional liquidators.
Stay tuned for upcoming cryptocurrency updates.