FTX’s bankruptcy proceedings begin with disturbing news: The top 50 creditors of Sam Bankman-Fried’s companies have more than $3 billion in claims. Among these there are two who are entitled to more than 200 million dollars, while the others have assets of more than 20 million dollars. Customer names have been withheld for now, and the company said it considered revealing identities harmful to competition.
According to previous documents filed in Delaware court, the company has total liabilities of more than $10 billion, which could be distributed among more than 1 million customers. FTX filed for Chapter 11 bankruptcy after it collapsed earlier this month following a deep liquidity crisis. John Ray, who took over the firm from Bankman-Fried, said he had never seen a failure like this, with a “total absence of reliable financial information.”
FTX: 3 Key Questions About Debt Collection
The recovery of client funds lends itself to some key problems. First of all, cryptocurrency exchanges also hold customer funds, unlike traditional intermediaries. This means that creditors who were unable to do so before the withdrawal freeze could have a long wait to get their money back. Another situation to clarify is if the account holders are creditors with some privilege in the recovery payments or are without any type of guarantee. Finally, it must be established whether those who withdrew the money shortly before filing bankruptcy are subject to recovery. Among other things, FTX asked the Court to be able to continue paying the remaining employees among the 330 workers it had around the world,
Cryptocurrencies continue to lose value
Meanwhile, the cryptocurrency market continues to suffer from the FTX effect and at the beginning of the week sees prices fall rapidly. Bitcoin has lost around 4% to $16,000 in the last 24 hours, while Ethereum has plunged 8.66% to $1,113. According to Ethereum co-founder Vitalik Buterin, the failure of FTX represents a lesson for all cryptocurrencies. “What happened to FTX was obviously a great tragedy. That being said, many in the Ethereum community also see the situation as a validation of things they have always believed in: anything centralized is suspect by default,” he said. Furthermore, Buterin referred to the previous debacle of the TerraUSD stablecoin and the associated LUNA token, arguing that while such a crash is necessary for the ecosystem, it would have been better if it had occurred when TerraUSD and LUNA were 10 times smaller.