Debtors of crypto exchange FTX
On November 11, 2022, the bankruptcy “Chapter 11” filing for crypto exchange FTX was filed with the Federal District of Delaware.
The downfall of one of the largest and most respected entities in the cryptocurrency landscape was a terrible event for the entire industry.
A few months later, the first report from connected debtors was announced, where the focal points that caused the failure in FTX and crypto FTT are discussed and identified.
The fall of crypto exchange FTX
It all started when Changpeng Zhao, CEO of Binance, the world’s largest cryptocurrency exchange, wrote a tweet regarding his concerns about the future of FTT and the FTX company.
According to CZ, Binance had decided to liquidate its $500 million FTT position given “recent revelations that have come to light.”
As part of Binance’s exit from FTX shares last year, Binance received approximately USD 2.1 billion equivalent in cash (BUSD and FTT). Due to recent revelations that have come to light, we have decided to liquidate any remaining FTT on our books. 1/4
— CZ 🔶 Binance (@cz_binance) 6 November 2022
The tweet caused a wave of sales on the FTT market and bank runs of withdrawals on the FTX crypto exchange, until the latter on November 8, 2022 decided to stop all activity on the platform until the situation stabilized.
Situation which, as we know, did not normalize and actually triggered until, 3 days later, the company decided to declare bankruptcy and file for bankruptcy in the US federal courts.
This affair came as a shock to the entire community, which saw one of the largest crypto exchanges by volume disappear within a week.
A great number of users lost their digital assets, which were stuck the processing of FTX’s bankruptcy.
A process is currently underway to liquidate the remaining assets of Sam Bankman Fried’s former company, so that what remains can be returned to the debtorsin relation to what was on the stock exchange and its subsidiaries before the escalation of the events.
It is worth mentioning once again how important it is to be aware of self-custodial crypto practices, to always be the true owners of cryptocurrencies and always have private keys in hand to sign transactions.
However, it is important to have a good knowledge base to avoid making technical mistakes and losing all your funds. To study and know always prove to be the most useful skills in this sensitive financial sector.
Debtor’s report on the FTX bankruptcy
FTX Trading Ltd. and its affiliated debtors recently announced the release of its first report identifying and clarifying the fallacy with which the previous FTX Group management handled some critical areas.
These include management and governance issues, finance and accounting, digital asset management and information security and cyber security.
John J. Ray IIIthe current CEO of FTX as well as the person responsible for the crypto exchange’s bankruptcy proceedings, said:
“We are releasing the first report in the spirit of transparency that we promised since the beginning of the Chapter 11 process. In this report, we provide details of our findings that FTX Group failed to implement appropriate controls in areas critical to ensuring cash and crypto-assets.”
According to John J. Ray III, the former people in charge of crypto exchange FTX and hedge fund Alameda Research, which includes the names of Sam Bankman Fried, Gary Wang and Nishad Singh, has failed to manage the company in a responsible and adequate mannershows little interest in establishing a way to oversee the accounts.
In the report that was carried out by the connected debtors, it is interesting to note the amount of data (over 1 million documents) that were taken into account to determine in which areas the previous management failed and to quantify the amount of cash left in the company.
The report was compiled through the combined work of a team of legal, restructuring, forensic accounting, cyber security, computer engineering and cryptography experts.
Without a doubt, the case of FTX crypto exchange bankruptcy is one of the situations there Bankruptcy trustees have it the most difficult framing and recovery of available assets, given the inherent complexity of the crypto world and the anonymity that crypto reigns over, and given the large number of companies and subsidiaries that FTX has created over time, precisely to avoid the mess that was there. to ignite.
Those who want to delve deeper into what happened in the report can find the information on the FTX Debtors Krool website, in the quick links section.
