The insolvent crypto exchange FTX has submitted initial figures on its liabilities in the insolvency proceedings. According to the figures, the 50 largest creditors account for $3.1 billion in debts.
The financial situation of the insolvent crypto exchange FTX does not bode well for creditors. A filing to the U.S. court in Delaware responsible for the insolvency proceedings lists FTX’s 50 largest debt packages, which add up to $3.1 billion. Not mentioned are the names of the creditors. Bankruptcy attorneys stress that the list is preliminary in nature as they continue to review information provided by FTX.
When an initial inventory was submitted to the court last week, it mentioned that FTX still had around 560 million in liquid assets. Regarding the extent of the debts, FTX CEO Sam Bankman-Fried, who has resigned in the meantime, estimated that they amounted to around 8 to 10 billion US dollars. The respected business paper Financial Times had also reported similar figures. Hopes that external investors might try to save FTX are unlikely to be fulfilled in view of the sums in the billions.
For customers and business partners of FTX and linked companies such as Alameda Research, the situation is frightening. The current list shows that the ten largest creditors are each expected to demand more than $100 million from FTX. In total, FTX is said to have at least 100,000 creditors, and the figure of more than 1 million creditors has also been mentioned. On a newly established web presence of the insolvency administrators, aggrieved customers of FTX can file claims online.
FTX’s huge financial hole is said to have been caused by the crypto exchange borrowing funds from closely held investment firm Alameda Research, forgoing resilient collateral. Sam Bankman-Fried, who was in charge of both FTX and Alameda Research, is said to have personally facilitated these allegedly illegal transfers.
Conclusion: Creditors of FTX must prepare for massive losses
Currently, the insolvency administrators are continuing their efforts to locate and secure possible assets of FTX and related companies. But the information available so far suggests that not even a 10 percent compensation rate will be achieved. In plain language, creditors of FTX, whether retail customers, crypto companies or institutional investors, will in all likelihood only be able to recover a fraction of their debts and will face a long wait.