When crypto exchange FTX filed for bankruptcy last week it said it owed money to about 100,000 creditors. A Tuesday filing puts that number at more than 1 million.
Lawyers for the company said in the filing that the case is complex and involves more than 100 debtor entities on the FTX side and a million-plus creditors—mostly FTX customers.
While bankruptcy code usually would require FTX and its associated companies to file a list of the top 20 creditors for each debtor entity, such as FTX, FTX US, and Alameda Research, its lawyers have requested permission to file a consolidated list of the top 50 people and organizations owed because the companies have so much overlap. If the request is approved, the company plans to file a top 50 list by Friday.
“Compiling separate creditor lists for each individual Debtor would consume an excessive amount of the Debtors’ limited time and resources at this critical time,” the filing read.
In a separate motion filed on Monday, lawyers for the company asked to consolidate dozens of bankruptcy cases for FTX-associated companies.
In the wake of FTX’s bankruptcy announcement, lawyers for the company also said they’ve been in contact with dozens of regulators, including the Securities and Exchange Commission, the Commodity Futures Trading Commission, and other federal, state, and international agencies.
“There is substantial interest in these events among regulatory authorities around the world,” the filing read.
Last week, FTX founder and CEO Sam Bankman-Fried stepped down and the company appointed as CEO John J. Ray III, who has helped creditors recover funds from troubled firms including Enron. It’s a role he hopes to reprise as chief executive of the 100-plus FTX-associated entities.
FTX’s bankruptcy comes after two other crypto companies, Celsius and Voyager Digital, filed for bankruptcy earlier this year, likely dragging their customers into lengthy processes as they seek repayment. In the Celsius case customers were designated as “unsecured creditors” while in the Voyager case they were “impaired” claimants. Neither designation guarantees customers will get their money back soon, if at all.
After a weeklong saga in which FTX faced a liquidity crunch, the company thought it had found salvation in acquisition by rival crypto exchange Binance. But after CEO Changpeng “CZ” Zhao initially agreed to buy FTX, he stepped away from the deal, saying FTX’s “issues are beyond our control or ability to help.”
The SEC and the Justice Department are now circling as some have accused SBF of mishandling FTX customer funds. Bankman-Fried has denied the allegations.
As noted by FTX’s lawyers in the Tuesday filing: “The events that have befallen FTX over the past week are unprecedented.”
Update, Nov. 15, 2022: This article has been updated to add mention of a filing asking to consolidate dozens of FTX-associated bankruptcy cases.
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