FTX said it can own more than 1 million creditors in the recent bankruptcy filing

November 16, 2022: -Beleaguered cryptocurrency exchange FTX may have 1 million creditors, according to a recent bankruptcy filing, hinting at the significant impact of its collapse on crypto traders.

The previous week, it filed for Chapter 11 bankruptcy security; FTX shows that it had over 100,000 creditors claiming in the case.

On Tuesday, in an updated filing, lawyers for the company stated, “In fact, there could be over one million creditors in these Chapter 11 Cases.”

Typically, in such cases, the lawyers stated that debtors must provide names and addresses of the top 20 unsafe creditors. Although, given the scale of its debts, the group instead filed a list of the 50 largest creditors on Friday.

According to the filing, five independent directors have been appointed at each of FTX’s leading parent companies, including the former Delaware district judge, Joseph J. Farnan, serving as a lead independent director.

FTX has been in communication with “dozens” of U.S. regulators, and overseas, the firm’s lawyers wrote. These also count the U.S. Attorney’s Office, the Securities and Exchange Commission and the Futures Trading Commission of the commodities.

This year has witnessed a spate of crypto companies, which include Celsius and Voyager Digital, fail as they contend with digital asset prices and ensuing liquidity issues.

In bankruptcy cases, traders on these platforms are designated “unsecured creditors,” which means they’ll likely be in a long queue of entities which seeks repayment, from suppliers to employees.

FTX has offered amateur, and professional traders spot crypto investing and more complex derivatives trades before collapsing. The company’s failure has decompressed the industry, with investors selling their areas and moving funds off exchanges. At its peak, the platform was priced by investors at $32 billion and had over 1 million users.

On Monday, the Binance and Crypto.com CEOs sought investors regarding their firm’s financial health. Binance’s Changpeng Zhao added his exchange had seen a minor surge in withdrawals, while Crypto.com chief Kris Marszalek said he confirmed had a “tremendously strong balance sheet.”