An initial filing pertaining to the Chapter 11 filing for FTX and affiliated firms has surfaced today. Filed yesterday by new leadership at FTX to manage the bankruptcy proceedings, the document notes there are over 100,000 creditors with claims – a number that can balloon to more than one million – as they try and sort out the mess.
The filing notes that a severe liquidity crisis hit FTX as questions arose about former CEO Sam Bankman-Fried’s leadership and possible malfeasance.
The document notes that there is “substantial interest in these events from regulatory authorities around the world.” Debtors representatives have been in contact with the following:
- Securities and Exchange Commission (SEC)
- Commodity Futures Trading Commission (CFTC)
- US Attorney’s Office
- and “dozens of Federal, state, and international regulatory agencies.”
A forensic team with experience in cybercrime and financial institutions has been enlisted from Sullivan & Cromwell.
The debtors are “committed to maximizing value for shareholders,” but facts are still developing.
This process is just getting started and will take many months to conclude.
While the courts sort through the bankruptcy proceedings, you can anticipate enforcement actions from both the SEC and CFTC and perhaps a criminal case from the US Department of Justice.
