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Highlights of FTX's first bankruptcy hearing: $1.24 billion cash balance; millions of creditors

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The identities of the top 50 creditors are being kept secret; the next hearing is scheduled for December 16.

Original source: BitpushNews

Original author: Mary Liu

On Tuesday, November 22 local time, FTX’s first bankruptcy In the hearing, held in Delaware, the judge outlined the rise and fall of FTX and a timeline of the company's collapse in just two weeks. FTX lawyers emphasized that asset protection and recovery is one of the most important core goals of FTX now, in addition to implementing proper corporate controls, transparency and investigations. Here are the key takeaways:

Attorney reveals 'significant amount' of FTX assets stolen or lost; cash balance $1.24 Billion; Creditors in the Millions FTX Advisors Have Been in Communication with DOJ and S.D.N. Cybercrime Division, which has launched a criminal investigation into FTX The identities of FTX’s top 50 creditors are being kept under wraps; next hearing Meeting scheduled for Dec. 16 The US House of Representatives and Senate have asked new FTX CEO John J.Ray III to testify sometime in December “The largest event in the history of corporate America and global corporate One of the sudden, hardest crashes"

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FTX's new management newly appointed legal counsel, James Bromley, a partner of the well-known law firm Sullivan & Cromwell, described the collapse of FTX "One of the most sudden and difficult collapses in American corporate history, and in the history of global corporate entities," and described FTX's empire as "the personal domain of former CEO Sam Bankman-Fried (SBF)".

FTX was valued at $32 billion earlier this year, and SBF briefly established itself as the industry's "white knight" during the crypto bear market.

The lawyer said: "The situation with FTX is that this field The latest and biggest failure, on its international exchange as well as its U.S. exchange, was effectively a bank run. At the same time as the run was happening, there was a leadership crisis... FTX Corporation was controlled by a very small number of people, led by Sam-Bankman-Fried, and there was a big problem with the management, which led to his resignation.”

Bromley commented: "The moment SBF handed over control, everyone realized for the first time, 'The emperor has no clothes'.

The Bahamas Liquidators agree to the Bankruptcy transferred to Delaware, USA /phelvetica>

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< phelvetica neue'"=""> Although FTX has filed for Chapter 11 in Delaware Bankruptcy Court on November 11 Bankruptcy, but the FTX liquidator appointed by the Bahamian court subsequently filed a separate lawsuit against FTX Digital Markets in the Southern District of New York, which led to a "fight" between the two cases. At the hearing on Tuesday, the lawyer said that the Bahamian liquidator had agreed to put Related cases filed in New York were transferred to Delaware for consolidation.

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Bahamas Securities Commission The main local authority investigating FTX's collapse last week ordered the transfer of assets held in FTX's encrypted wallets to government-controlled wallets for an undisclosed amount. Bahamas liquidators have said that FTX’s entire business is run through its local arm, so disagreements remain over who is entitled to control the company’s assets and how they are distributed.

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Bromley said: “In our dealings with any of these foreign entities, and with respect to any regulator or liquidator that may be appointed , it must be kept in mind that we are focusing on one word, reciprocity. "< /phelvetica>

'Substantial' FTX Assets Stolen or Missing; Total Cash Balance $1.24B; Creditors in the Millions >

< phelvetica neue'"=""> FTX Crisis A key aspect of Alameda and the FTT Token, which is a token issued by FTX. The lawyers reviewed the history of FTX and its affiliates, pointing to the creation of the FTT token in April 2019 and the formation of the Alameda entity in November 2017. In addition to the $477 million hack that occurred shortly after FTX entered Chapter 11 bankruptcy, there have been multiple attacks in which “substantial assets were either stolen or lost,” the lawyers said.

The latest bankruptcy filing shows that FTX has 36 banks and more than 200 bank accounts, and the FTX Group has a combined cash balance of $1.24 billion, of which Alameda has the largest cash balance, but the scope of this case seems to be far greater than people expected FTX expects “there will be millions of creditors” in bankruptcy, the company’s lawyer Glueckstein said.

While FTX invests in cryptocurrencies and tech ventures, it also spends on real estate in the Bahamas Nearly $300 million, mostly for residences and vacation homes purchased by executives, is higher than previously reported.

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FTX lawyers stated that they divided FTX’s assets and various entities into four silos (Silos), namely:

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- WRS( West Realm Shires) silos that control and contain assets in the United States.

- Alameda silos, which included the now-defunct hedge fund Alameda Research.

- venture capital silo investing in crypto companies and startups.

- Dotcom silo, which includes international operations, most of FTX's deposits.

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FTX is spread all over the world, and the proportion of clients’ geographic regions disclosed by lawyers is:

- Cayman Islands - 22% of registered customers.

- U.S. Virgin Islands - 11% of registered customers.

- China - 8% of registered customers.

FTX said it hopes to prepare a full balance sheet by January detailing Its total assets and liabilities. New management is working overtime day and night because FTX does not have a system in place to manage its cash and documents related to its internal controls. Asset recovery and protection efforts include not just cryptoassets and currencies but “information,” Bromley said, adding that the firm has also brought in independent directors for the first time.

New FTX leadership is working with US law enforcement, regulators

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< phelvetica neue';="" min-height:="" 15.0px"=""> Bromley in The hearing said the new company leadership is cooperating with investigators from the U.S. government and regulators: “We also maintain ongoing communication with the U.S. Department of Justice, including the Southern District of New York’s Cybercrime Unit, and with the SEC and CFTC. In addition, FTX’s new CEO John Ray III and other members of the leadership team are coordinating with “the U.S. government and various regulatory agencies around the world who are very interested in this situation.”

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< phelvetica neue'"=""> Bromley also mentioned that the U.S. House of Representatives and Senate have asked John J.Ray III to testify sometime in December. Bitui previously reported that both the House Financial Services Committee and the Senate Agriculture Committee have announced that they will hold hearings on the collapse of FTX next month. The current public witness is CFTC Chairman Rostin Behnam.

< phelvetica neue'"="">The identities of the top 50 FTX creditors are being kept private for now; next hearing scheduled for Dec. 16< /phelvetica>

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< phelvetica neue'"=""> A number of major cryptocurrency firms, including Genesis, Galaxy Digital, Wintermute and crypto hedge fund Galois Capital, have voluntarily disclosed their exposure to FTX mouth. Documents filed by FTX over the weekend show that the company owes more than $3 billion to the top 50 creditors alone, with the top 10 companies each claiming more than $100 million in claims, with many of the major creditors still unknown. There are still concerns that the risk will continue to spread.

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Delaware District Judge John Dorsey granted a provisional motion at Tuesday's hearing allowing FTX to withhold the identity of its creditors for the time being, with future hearings set to Discuss this issue further.

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U.S. Office of the Trustee (Department of Justice oversees bankruptcy proceedings Division) objected to part of the motion, arguing that transparency was a necessary part of the process, but FTX attorneys countered that it was important to protect FTX's clients from being involuntarily disclosed as investors, and that FTX's client list is one of the firm's most valuable assets. One, it should be protected from competitors.

< phelvetica neue'"=""> Dorsey also ruled that FTX should continue to pay the remaining employees and suppliers it deems essential to the business. FTX's previous leadership, including SBF, co-founder Gary Wang, engineering director Nishad Singh, Alameda Research CEO Caroline Ellison, and others are not allowed to receive any further compensation.