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 one hundred debtor entities on the FTX side and a million-plus creditorsmostly 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 the wake of FTXs bankruptcy announcement, lawyers for the company also said theyve 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, whos helped creditors recover funds from troubled firms including Enron. Its a role he hopes to reprise as chief executive of the 100-plus FTX-associated entities.
FTXs 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 week-long saga in which FTX faced a liquidity crunch, the company thought it had found salvation in being acquired by rival crypto exchange Binance. But after CEO Changpeng CZ Zhao initially agreed to buy FTX, CZ stepped away from the deal, saying FTXs 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 FTXs lawyers in the Tuesday filing: The events that have befallen FTX over the past week are unprecedented.
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