Connect with us

Cryptocurrency

FTX businesses owe more than $3bn to largest creditors

Avatar photo

Published

on

Sam Bankman-Fried’s businesses owe more than $3bn to their largest creditors, according to court filings, as the cryptocurrency group’s huge bankruptcy process gets under way.

The crypto exchange FTX and linked companies founded by Bankman-Fried filed a list of their 50 largest creditors on Sunday, all of which are customers and owed more than $20mn, with two of them due more than $200mn. The companies’ total liabilities are estimated at more than $10bn, according to earlier filings, and it may have more than 1mn creditors.

Publication of the list as part of Chapter 11 bankruptcy proceedings in Delaware had been delayed as bankruptcy practitioners struggled to locate reliable records at FTX group, which collapsed earlier this month after a liquidity crisis and accusations it mishandled client funds.

John Ray III, the bankruptcy expert who has taken control of the business and who oversaw the liquidation of Enron, said in earlier filings he had never seen “such a complete failure of corporate controls and such a complete absence of trustworthy financial information”.

FTX said it may need to update the creditor list as “investigation[s] continue regarding amounts listed, including payments that may have been made but are not yet reflected on the [company’s] books and records”.

The filings show 10 clients are owed more than $100mn by FTX. The top 50 creditors, whose names are redacted in the filing, are all owed more than $20mn. FTX said in earlier court filings that disclosing the names of its large account holders would be competitively damaging.

FTX’s clients included large financial groups that traded cryptocurrencies, such as hedge funds. Unlike traditional exchanges, cryptocurrency trading venues also typically take custody of client funds. Customers who were unable to withdraw their funds before the firm halted payouts now face a long wait to recover their assets.

In other recent cryptocurrency bankruptcy cases involving Voyager Digital and Celsius Networks, a key legal question has been determining whether account holders are unsecured creditors or have a higher priority status in determining who gets recovery payments first. Another question likely to arise is whether account holders who withdrew their money just before the bankruptcy filing are subject to clawbacks.

The collapse of the exchange, which until this month was widely viewed as among the most reliable digital asset venues, has stoked fears that other firms could be at risk from their exposure to FTX and a crisis of confidence in the market.

Shares in Silvergate, a US bank known for its involvement in crypto, fell around 30 per cent last week. The bank has said it has “the liquidity and the capital ratios to support the volatility”.

Hedge fund Galois Capital earlier this month told customers it had “roughly half of our capital stuck on FTX”. Based on Galois’s assets under management as of June, that could amount to around $100mn.

In another filing on Saturday, FTX said the company had 330 workers around the world but was experiencing “extraordinary attrition”. It asked the court’s permission to continue paying remaining employees it said were critical to the bankruptcy case.

FTX disclosed in court papers that new CEO Ray is billing his time at $1,300 an hour and had been paid a $200k retainer fee. It has also retained three new executives to assist in the bankruptcy including a chief financial officer.

An initial court hearing is set for Tuesday morning in the federal bankruptcy court in Delaware in front of Judge John Dorsey.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Cryptocurrency

Green Cryptocurrency May Be the Future – This One Just Added Dyson and Samsung as Affiliate Partners

Avatar photo

Published

on

Disclaimer: The Industry Talk section features insights by crypto industry players and is not a part of the editorial content of Cryptonews.com.

The Impact project has added Samsung and Dyson as affiliate partners. This platform’s IMPT token is an ideal asset for value-seeking investors to have in their portfolios.

Samsung and Dyson Join the Impact Project’s Affiliate Network

This week, Impact Project expanded its affiliate network by adding two of the world’s biggest companies. Korean technology conglomerate Samsung and Singapore-based household appliances company Dyson has joined the platform’s network of partners, with both firms committing to a greener future by using the Impact Project as a channel.

With this new move, the Impact Project has continued to grow its ever-expanding affiliate network as it looks to bring the corporate landscape to a greater consciousness of the climate challenges faced by the world.

More than 25,000 companies worldwide have already signed deals to join the Impact Project’s network. In one way or another, these companies will integrate the platform into their operations, enabling their customers to shop, make payments for carbon credits, and offset their carbon footprint.

Of the 25,000-plus companies in the Impact Project’s affiliate network, over 10,000 are retailers. These companies will reward their customers with IMPT tokens for using the platform while also serving as an incentive for other companies to do the same.

Transforming the Carbon Credit Landscape

The Impact Project is a blockchain-based platform looking to make it easier for individuals and companies to purchase carbon credits. Built on the Ethereum blockchain, the initiative has gained massive buzz in the crypto market for its potential to transform the fight against climate change.

So far, Impact Project is operating in an untapped niche. For years, many have asked that the blockchain space be more active in the fight against global warming. And while there is still much to be desired, platforms like the Impact Project are leading the charge and showing that blockchain can be a force for good.

The Impact Project has recognized the need for blockchain to be at the center of the fight against climate change. The platform aims to optimize the trading process for these credits, improving efficiency and transparency in the process while taking industry players away from the old and antiquated processes that have been so far the standard.

Since the state-based credit issuance system has been prone to inefficiency and bureaucracy, interested buyers have found it more challenging to purchase these credits over time.

The Impact Project will also address the liquidity problem, with credits being offered as non-fungible tokens (NFTs) that would allow users to trade seamlessly and efficiently. Users can control the number of tokens in circulation while also choosing whether or not they’d like to sell or burn them entirely.

Buy IMPT & Create a Better World

IMPT, the native token for the Impact Project, is one of the most exciting coins on the market. The coin, available on presale, has been available on presale, has so far raised over $13.2 million in less than two months. And, even with the bearish forces on the market being strong, it is impressive how much IMPT has managed to capture the attention of value-seeking investors who would also like to create better work.

As each stage of the IMPT presale goes on, the asset’s value rises. This means that the token holds a lot of untapped potential for gains. The digital asset trades at $0.023 but will move to $0.028 in the next phase.

For investors looking for the perfect ESG investment, IMPT is a good coin to buy.

Buy IMPT on Presale Now

Continue Reading

Cryptocurrency

IMF Seeks Stronger Regulation of Cryptocurrency in Africa as Adoption Takes Hold

Avatar photo

Published

on

The collapse of the FTX cryptocurrency exchange has attracted the attention of global regulators, including the International Monetary Fund (IMF). Before its demise, FTX was the third-largest cryptocurrency exchange by trading volumes, and it had a significant presence in developing countries.

IMF calls for crypto regulations in Africa after FTX collapse

In a recent statement, the IMF said that the demise of FTX and the dropping prices of Bitcoin, Ethereum, and other cryptocurrencies, have necessitated better regulations in the industry and consumer protection measures.

The global financial institution noted that crypto assets were highly volatile, and their decentralized nature made it challenging for most governments to regulate the industry. Therefore, there was a need to balance lowering the risk posed by the industry and supporting innovation.

It further noted that only a quarter of the countries in sub-Saharan Africa regulated cryptocurrencies. Moreover, two-thirds of these countries had implemented some restrictions. In contrast, another six, including Cameroon, Ethiopia, Tanzania, Lesotho, Sierra Leone, and the Republic of Congo, had imposed a total ban on cryptocurrencies.

On the other hand, Zimbabwe has mandated all the banks licensed to operate in the country to halt processing cryptocurrency transactions. Additionally, Liberia instructed a crypto startup that had started offering services in the country to halt operations.

Africa has become a main hub for cryptocurrency activities. Data from Chainalysis shows that the number of crypto transactions in the country has increased over the years. However, the size of crypto transactions in the continent is smaller than in other regions, with the monthly transactions peaking at $20 billion in mid-2021.

The highest number of crypto users in the region are in Kenya, Nigeria and South Africa. The majority of people in the region use cryptocurrencies to make commercial payments. However, the volatility of these assets makes them unsuitable for use as a store of value.

Policymakers have raised concerns about whether crypto assets can be used to make illegal transactions outside the region and to avoid the rules put in place to avoid capital outflows. The high use of cryptocurrencies in the region could reduce the effectiveness of the monetary policy, which poses a danger to financial and macroeconomic stability.

IMF concerned about the adoption of crypto as a legal tender

The IMF has also said that the cryptocurrency sector’s risks were higher if these assets were adopted as a legal tender, citing an example of the Central African Republic. The country became the second globally to adopt Bitcoin as a legal tender. According to the IMF, holding crypto assets as a means of payment puts public finances at risk.

The IMF has also added that adopting BTC as a legal tender in the Central African Republic has caused conflict between the country and the Bank of Central Africa States (BEAC), as it violates the institution’s treaty. Central Africa’s Banking Commission, which oversees the BEAC banking sector, has banned using cryptocurrencies for financial transactions.

Related

Dash 2 Trade – Next 100x Crypto

Dash 2 Trade

  • Early Access Presale Live Now
  • Power’s Crypto Analytics Ecosystem
  • Solid Proof Audited, CoinSniper KYC Verified
  • Trading community of 70,000+ members

Dash 2 Trade

Join our Telegram channel to stay up to date on breaking news coverage

author image

Author: Ali Raza

Ali is a professional journalist with experience in Web3 journalism and marketing. Ali holds a Master’s degree in Finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of leading cryptocurrency publications including Capital.com, CryptoSlate, Securities.io, Invezz.com, InsideBitcoins, BeinCrypto, and more. …

View full profile ›

Continue Reading

Cryptocurrency

Crypto Firm FTX’s Ownership of a U.S. Bank Raises Questions

Avatar photo

Published

on

Among the many surprising assets uncovered in the bankruptcy of the cryptocurrency exchange FTX is a relatively tiny one that could raise big concerns: a stake in one of the country’s smallest banks.

The bank, Farmington State Bank in Washington State has a single branch and, until this year, just three employees. It did not offer online banking or even a credit card.

The tiny bank’s connection to the collapse of FTX is raising new questions about the exchange and its operations. Among them: How closely tied is FTX, which was based in the Bahamas, to the broader financial system? What else might regulators have missed? And in the hunt for FTX’s missing assets, how will Farmington get dragged into the multibillion-dollar bankruptcy?

The ties between FTX and Farmington State Bank began in March when Alameda Research, a small trading firm and sister to FTX, invested $11.5 million in the bank’s parent company, FBH.

At the time, Farmington was the nation’s 26th-smallest bank out of 4,800. Its net worth was $5.7 million, according to the Federal Deposit Insurance Corporation.

The sudden collapse of the crypto exchange has left the industry stunned.

  • A Spectacular Rise and Fall: Who is Sam Bankman-Fried and how did he become the face of crypto? The Daily charted the spectacular rise and fall of the man behind FTX.
  • A Symbiotic Relationship: Mr. Bankman-Fried’s built FTX partly to help the trading business of Alameda Research, his first company. The ties between the two entities are now coming under scrutiny.
  • Missing Assets: Lawyers for FTX said a substantial amount of the company’s assets had either been stolen or were missing, casting doubt on the odds of recovering billions of dollars in crypto that customers lost.
  • A Bid for Influence: ​​In just three years, Mr. Bankman-Fried built a massive operation to woo politicians, regulators and nonprofits to support his crypto goals. Here’s how.

FTX’s investment, which according to financial regulators was more than double the bank’s net worth, was led by Ramnik Arora, a top lieutenant of the exchange’s founder, Sam Bankman-Fried. Mr. Arora was responsible for many of the much larger deals that FTX signed with Sequoia Capital and other venture capitalists that eventually failed.

Farmington has more than one crypto connection. FBH bought the bank in 2020. The chairman of FBH is Jean Chalopin, who, along with being a co-creator of cartoon cop Inspector Gadget in the 1980s, is the chairman of Deltec Bank, which, like FTX, is based in the Bahamas . Deltec’s best-known client is Tether, a crypto company with $65 billion in assets offering a stablecoin that is pegged to the dollar.

Tether has long faced concerns about its finances, in part because of its reclusive owners and offshore bank accounts. Through Alameda, FTX was one of Tether’s largest trading partners, raising concerns that the stablecoin could have yet-undiscovered ties to FTX’s fraudulent operations.

Before the acquisition, Farmington’s deposits had been steady at about $10 million for a decade. But in the third quarter of this year, the bank’s deposits jumped nearly 600 percent to $84 million. Nearly all of that increase, $71 million, came from just four new accounts, according to FDIC data.

It’s not clear what FTX’s plan was for Farmington. Online, Farmington now goes by Moonstone Bank. The name was trademarked a few days before FTX’s investment. Moonstone’s website doesn’t say anything about Bitcoin or other digital currencies. It says Moonstone wants to support “the evolution of next generation finance.”

Deltec and Moonstone did not return a request for comment.

It’s unclear how FTX was allowed to buy a stake in a US-licensed bank, which would need to be approved by federal regulators. Banking veterans say it’s hard to believe that regulators would have knowingly allowed FTX to gain control of a US bank.

“The fact that an offshore hedge fund that was basically a crypto firm was buying a stake in a tiny bank for multiples of its stated book value should have raised massive red flags for the FDIC, state regulators and the Federal Reserve,” said Camden Fine , a bank industry consultant who used to head the Independent Community Bankers of America. “It’s just astonishing that all of this got approved.”

Continue Reading
Advertisement

Trending