Mutual funds, celebrity athletes, a million creditors caught up in the FTX crash

The directors of FTX asked the court to be able to notify creditors of the bankruptcy status by email

FTX can haveMore than a million creditorsAccording to a document filed by the bankrupt company with a US court dealing with this bankruptcy. The estimate was previously ten times less, about 100,000 creditors, among whom, in addition, were personalities known as the NBA player. Stephen Curry or the NFL Tom Brady, according to Efe. Both were ambassadors for the company and have shares in it. Investment fund Sequoia Capital was also affected.

The company created by Sam Bankman-Fried, known as SBF, has filed for Chapter 11 of the US Bankruptcy Code. In the letter he sent to the court, he acknowledged that his case was “complex”, as it affected “more than 100 debtor entities”, moreover, it involved “non-traditional assets”. This number, however, can change. As they explain, “there could be more than a million creditors in these cases.” For this reason, they are of the opinion that rather than naming the 20 principal creditors, as they ought to do by law, they should List up to 50 and that they must be submitted, at the latest, on November 18th.

The FTX directors also asked the court to be able to notify creditors of the bankruptcy status via email instead of having to do so at their homes. They argue that the platform actually communicated with its customers through this system. They view it as not only the “most efficient way” to do this, but also the one with the best chance of getting a response.

The company, like many others dedicated to crypto assets, has run an aggressive advertising campaign through sponsorships. In addition to brand ambassadors, they have had endorsement deals with other athletes such as Aaron Jones (also an NFL player) or Distort me (Which belongs to the Los Angeles Angels, MLB team, Major League Baseball). His sponsorship also reached teams and stadiums. Such as the FTX Arena where the Miami Heat play their home games in the NBA.

In the sector, which has been greatly affected by the reputational collateral damage of the case, it is difficult for creditors to recover the funds. Major investors, such as Sequoia Capital, They lose their investment. FTX itself is on the verge of extinction, because after Bankman-Fried leaves as CEO (still the largest shareholder), it depends on an outside interim director who must consider whether it is worth trying to save the company or whether it is better to liquidate it.

The statement the company sent to the court begins: “What has happened to FTX in recent weeks is unprecedented.” “Just over a week ago, FTX, led by its co-founder Sam Bankman-Fried, was considered one of the most respected and innovative companies in the cryptocurrency industry,” the document continues, which also mentions that its platform was second. exchange The largest in the world.

The document and the updated list of creditors are a new chapter in the collapse of an empire It amounted to 32 billion dollars.. However, it collapsed within days – if not hours – when doubts arose about its solvency and a panic wave caused many users to sell off their assets. FTX lent money from these operations to other companies — some have compared the case to a Ponzi scheme — and was unable to meet its obligations because it had no liquidity. When I tried to restrict operations, the prices of most cryptocurrencies and even Bitcoin plummeted to their lowest levels in years: It touched $16,000 when it reached over 60,000 a year ago.

Later, both SBF itself and its main competitor, Binance CEO Changpeng Zhao, tried to save the company. Zhao was the first to do this, announcing his intention to buy FTX in order to provide it with the liquidity it needs and, by the way, market stability. However, it fell back after only one day and after accessing the company’s internal balance sheet. Meanwhile, Bankman-Fried tried to find investors who would be able to contribute the estimated amount required –About $8 billion– to rectify the situation. to me general The The Wall Street JournalHe spent the weekend liaising with several employees and investors to make it happen.