FTX in talks with regulators during bankruptcy filings – may have 1 Million different creditors

The collapsed crypto exchange FTX described a “severe liquidity crisis” in U.S. bankruptcy filings. The group was said to have more than 1,000,000 creditors. As a result, regulators opened an investigation and lawmakers demanded clearer rules for the industry's operation.

FTX's filing to a U.S. Bankruptcy Court was published late Monday in the United States. It stated that it had been in touch with financial regulators, and had appointed five independent directors at each of its main businesses, including Alameda Research, its sibling trading company.

The cryptocurrency exchange filed for bankruptcy protection Friday. Panicked traders pulled $6 billion from the platform within 72 hours. Rival exchange Binance, meanwhile, abandoned a rescue agreement.

According to the court filing, “FTX faced a severe liquidity crisis that necessitated the filing of these cases on an emergency basis last Friday,”

Sam Bankman-Fried, former chief executive of FTX, said he grew his business too quickly and didn't notice signs that trouble was coming at the exchange.

The weekend saw Bankman-Fried try to raise cash from investors in order to repay FTX traders, institutional clients and other customers. This was even after the company sought bankruptcy protection.

Reuters Graphics Reuters Graphics
Reuters Graphics Reuters Graphics

FTX's bankruptcy filings include more than one hundred thousand creditors… and this number could even surpass one million, according to the filings. These numbers were revealed because FTX asked that several FTX group companies file one consolidated list of major creditors and not separate ones.

The filings also confirmed that FTX responded to a cyberattack on November 11th. FTX stated that it had seen “unauthorized transactions” on their platform.

FTX has appointed Alvarez & Marsal to be its financial advisor. The firm stated that it has been in touch with the U.S. Attorney's Office and SEC, CFTC and dozens other federal, state, and international regulatory agencies for the past 72 hours.

Bitvo, a Canadian crypto exchange, announced Tuesday that it has terminated its agreement to be purchased by FTX. The deal was due to close in Q3 of this year.


The sudden collapse of Bahamas-headquartered FTX, once a rising star of the crypto industry with a $32 billion valuation as of January, has sparked investigations by financial regulators and other supervisory bodies around the world.

In a statement dated Monday by the Securities Commission of The Bahamas (HTM0_), two PwC partners were approved by The Supreme Court to act as joint provisional liquidators of FTX.

According to the Commission, it was taking steps to exercise its regulatory power to protect clients and creditors of FTX Digital Markets (a local unit within the exchange), “given the magnitude, urgency, and international implications of the unfolding events”.

Several global regulators have taken licences from local FTX units and are investigating the company. A source with knowledge of the investigations informed Reuters.

While many of their crypto industry counterparts and partners are quick to distance themselves and show their sound financials and demonstrate their financial strength, some, such as U.S. cryptocurrency broker Genesis Trading, have revealed that they are exposed to FTX by either holding tokens on the exchange, or owning FTX’s native token FTT.

FTT fell around 94% last week while Bitcoin lost 22%

“One has to ask why prices are not already lower than they are. The answer may simply be that the scale of this collapse is such that credit concerns now trump every other risk, and participants are focusing on moving assets off exchanges, at the short-term expense of price risk management,” said liquidity provider B2C2 in a note to customers.

Although the impact has been limited to cryptocurrency exchanges and traders so far, it is now being discussed in mainstream policy discussions.

Francois Villeroy De Galhau, French central bank governor, demanded a global regulatory response for financial uncertainty caused due to the crypto market in Tokyo.

He stated, “Let me stress that this uncertainty is why we need to regulate strongly and quickly crypto assets internationally.”

Monday's call by officials of the U.S. Federal Reserve to increase regulatory oversight of crypto finance was made by legislators and .

Some argue that regulators should have acted sooner.

Citadel's founder and CEO, Ken Griffin, said to the Bloomberg New Economy Forum in Singapore that FTX was “one of the greatest travesties in financial markets history.” Individuals will lose billions of dollar collectively, which undermines trust in financial markets.

He stated that the American investor's losses “really strikes the entire core essence of what investor protection's all about.”