Previously, FTX said that only over 100,000 creditors were involved in the Chapter 11 bankruptcy filing. However, the actual number seems far-fetched from the former record.
The updated filing, which was released on Tuesday, Nov. 15, suggests that the involved creditors have reached over one million. The lawyers noted that the Bahamas-based crypto exchange has kept in touch with “dozens” of regulators from the US and other countries.
One Million Creditors in Latest Bankruptcy Protection Filing
(Photo : Leon Neal/Getty Images)
LONDON, ENGLAND – NOVEMBER 10: In this photo illustration the FTX logo and mobile app adverts are displayed on screens on November 10, 2022 in London, England. The Bahamas-based crypto exchange’s larger rival, Binance, walked away from a potential bailout deal, as FTX struggles with a wave of customer withdrawals that have created a liquidity crunch.
Ending up with bankruptcy is the worst thing that a company will ever come up with, but the situation could still worsen upon knowing the number of involved organizations in the latest claim.
That’s the case with FTX, a cryptocurrency exchange that’s already collapsing at the moment. Earlier, it only indicated hundreds of creditors who have claims in the case. However, the numbers are much higher in a recent filing.
According to a report by Reuters, FTX highlighted that the “severe liquidity crisis” it experienced might have over one million creditors, including some lawmakers and regulators.
The filing suggests that five new independent directors were assigned to every parent company of the FTX.
For the past 72 hours, the company has kept in touch with “dozens” of US-based and foreign regulators, according to the lawyers. The list includes the Securities and Exchange Commission and the US Attorney’s Office.
The increase in digital asset prices and failure to comply with the policies have forced some crypto firms to lie low. As such, Voyager Digital and Celsius have struggled to maintain the stability of the exchange because of liquidity issues.
Prior to the downfall of FTX, the company launched an exclusive offer to some crypto investors and traders. At that time, the firm hit a $32-billion value. Over one million users are using the platform.
The crypto industry has faced some problems in the past, but this could leave a ripple effect on some investors with good positions in the market. Most likely, some are already transferring their funds to a safer platform exchange.
Related Article: FTX Is Probing Possible System Intrusion After Filing for Bankruptcy
FTX Seeks Help From Binance, But to No Avail
According to CNBC, FTX has tried to salvage its reputation for the possible financial collapse as it braced for what’s coming next.
At this point, it sought help from Binance, but the latter did not push through the deal because it heard some reports about the bad customer service of FTX.
The weekend was another story for the company. The cyberattack reportedly hit millions of users. The hackers stole over $400 million worth of tokens from the exchange.
“FTX faced a severe liquidity crisis that necessitated the filing of these cases on an emergency basis last Friday. Questions arose about Mr. Bankman-Fried’s leadership and the handling of FTX’s complex array of assets and businesses under his direction,” the lawyers wrote in a recent filing.
Read Also: FTX Chief Sam Bankman-Fried Admits Fault in Crypto Exchange Near Collapse
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Written by Joseph Henry
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