BENGALURU/TOKYO (November 15): Collapsed crypto exchange FTX described a “severe liquidity crisis” in official bankruptcy filings released on Tuesday, as regulators opened investigations and called for more enforcement. rapid rules for the paralyzed industry.
FTX’s filing with a U.S. bankruptcy court said it was in contact with financial regulators and had named five new independent directors at each of its major companies, including Alameda Research.
FTX founder and former chief executive Sam Bankman-Fried said he had grown his business too quickly and hadn’t noticed any signs of trouble on the stock market, the fall of which sent shockwaves through the world. crypto industry, the New York Times reported late Monday.
“FTX faced a severe liquidity crisis which necessitated the filing of these emergency filings last Friday,” the court filing said.
“Questions have arisen about Mr. Bankman-Fried’s leadership and the management of FTX’s complex array of assets and businesses under his leadership.”
FTX also confirmed that it responded to a cyberattack on Friday, after saying on Saturday that it had seen “unauthorized transactions” on its platform.
It filed for bankruptcy protection on Friday in one of the most publicized crypto explosions after frenzied traders withdrew US$6 billion (RM27.44 billion) from the platform in just 72 hours and that rival exchange Binance abandoned a bailout deal.
The implosion of FTX, once a crypto industry darling with a US$32 billion valuation in January, has spurred investigations by the US Department of Justice, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), a source with knowledge of the investigations said Reuters.
Crypto industry peers and partners were quick to distance themselves from FTX or proclaim sound finances, while bitcoin with 19% losses this month and other tokens suffered.
The fallout has so far been limited to crypto exchanges and traders, but also features in mainstream policy discussions.
French Central Bank Governor Francois Villeroy de Galhau, in a speech in Tokyo, called for a global regulatory response to the financial uncertainty caused by the crypto market.
“Let me stress that this uncertainty is why we need to strongly and quickly regulate crypto assets internationally,” he said. “The latest episodes show us that we cannot allow a second ‘crypto winter’ to add further uncertainty and financial instability.”
On Monday, officials from the U.S. Federal Reserve and the Legislature called for crypto-finance to come under greater regulatory scrutiny.
The Delaware bankruptcy court ruled that the relief sought by FTX was in the best interests of debtors, creditors and all parties.
FTX’s filing stated that “Debtors’ Chapter 11 cases are complex, consisting of over 100 debtor entities and involving non-traditional assets.”
FTX has engaged Alvarez & Marsal as financial advisor.
The company said it has been in contact with the U.S. Attorney’s Office, the SEC, the CFTC and dozens of federal, state and international regulatory agencies over the past 72 hours.
FTX has appointed five independent directors to its various units to ensure good corporate governance during its bankruptcy, the company’s attorneys said in the filing. Former U.S. District Court Judge Joseph Farnan and Matthew Doheny will oversee FTX Trading.
Mitchell Sonkin was named director of West Realm Shires, Matthew Rosenberg of Alameda Research and Rishi Jain of Clifton Bay Investments, according to the filing.