Sam Bankman-Fried’s company FTX owes $4.56b to 50 creditors amid crypto bankruptcy, new CEO receiving $1946 per hour

The collapsed cryptocurrency exchange owes billions to more than a million creditors but its new CEO is making a nifty $2000 for every hour he works.

Failed cryptocurrency exchange FTX has revealed that it owes an eye watering US$3.1 billion (A$4.65 billion) to its largest 50 creditors.

And to its top 10 creditors, FTX owes about US $1.45 billion, according to a court filing on Saturday, Reuters reported.

It’s believed there may be more than one million creditors in total and the overall amount the company owes will be much higher.

The whopping figure is the latest in a round of revelations that the crypto platform has been run into the ground by its founder, Sam Bankman-Fried.

At its peak, the firm was valued at US$32 billion ($A47 billion) and Mr Bankman-Fried was lauded as a genius, with his face splashing on the cover of many magazines and attending business events to share his tips for success. It is now worth absolutely nothing.

That’s because earlier this month, FTX filed for chapter 11 bankruptcy along with around 130 affiliated entities, including controversial trading firm Alameda Research, which is alleged to have played a central role in the implosion last week.

Among other things, Mr Bankman-Fried allegedly used billions of dollars from customer money for his trading company Alameda Research which is currently under criminal investigation by multiple police forces.

The firm’s US appointed liquidator, John Ray, said he had never seen such a failure to run a business.

And according to court documents, Ray is now technically acting as the new CEO of FTX, and is receiving $1300 (A$1946) for every hour he works.

FTX founder Sam Bankman-Fried on NBC's Meet the Press in September 2022, just a month before he filed for bankruptcy. Source: YouTube

FTX is being hailed as a cautionary tale. Picture: Stefani Reynolds / AFP

In a filing with the US Bankruptcy court, FTX submitted that “the Debtors will pay a current hourly fee of $1,300, plus reasonable out of pocket expenses, which will be billed not less than monthly,” to Ray.

At time of writing, Ray said he was owed US$20,000 for his work so far. This would be offset against a $200,000 retainer he secured from creditors.

Ray has 40 years experience in insolvency but said he had never seen anything as bad as FTX.

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” he wrote in a sworn declaration filed in a US court.

“From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”

Ray previously dealt with the collapse of the energy giant Enron, which was once the seventh-largest in the US, but went bankrupt under the weight of years of illicit business deals and accounting tricks and saw its chief executive jailed.

Ray said a “substantial portion” of assets held by crypto exchange may be “missing or stolen”.

FTX is alleged to have secretly transferred up to $US10 billion ($A14.8 billion) of customer funds to Alameda to fund risky cryptocurrency trades prior to its collapse, which came after rumours of a liquidity crisis saw customers rush to pull their money out.

A further $US600 million was siphoned from FTX’s digital wallets the same day it declared bankruptcy with Bankman-Friend claiming it had been “hacked”.

Company representatives said “unauthorised transactions” had occurred on FTX with CoinDesk reporting that a whopping $US600 million ($895 million) had mysteriously flowed out of the exchange’s wallets.

Some customers have reported having a balance of $0 after their money was siphoned out.

Several suggested that the sophistication of the hack indicated a possible inside job and others pointed out the timing was strange, since it happened the same day the exchange went bust.

11) I'll get to what happened. But for now, let's talk about where we are today.

— SBF (@SBF_FTX) November 15, 2022

The collapsed cryptocurrency exchange owes billions as its liquidator says he has never seen such a failure to run a business. Picture: Saul Loeb/AFP

In Australia, KordaMentha was named voluntary administrator of the local FTX subsidiary on Friday, with around 30,000 customers hoping to claw back their money.

The Supreme Court in the Bahamas named PwC provisional liquidators to oversee FTX’s assets.

A filing from the Bahamian liquidators revealed that “findings to date indicate that serious fraud and mismanagement may have been committed” at the company.

On Tuesday, a group of crypto investors filed a class action against Bankman-Fried and others who promoted FTX.

The US Manhattan attorney‘s office is looking at whether FTX misused client funds by lending billions of dollars to a separate trading firm founded by Bankman-Fried.

Bankman-Fried has done multiple media interviews and made several tweets defending FTX and claiming it is still solvent, which lawyers have said will undermine his defence.

The CEO of Alameda

HOW IS THIS REAL LIFE ?!? pic.twitter.com/wMMYdD9TEX

— The Milk Road (@MilkRoadDaily) November 11, 2022

SHE IS THE CEO OF FTX / ALAMEDA

WHERE WHERE THE SIGNS LMAO pic.twitter.com/xrEhke9WuC

— GURGAVIN (@gurgavin) November 11, 2022

Bankman-Fried and his former partner Caroline Ellison were reportedly part of a 10-person group that ran FTX and its sister cryptocurrency trading firm Alameda Research from a “luxury penthouse” in the Bahamas.

Ellison, the CEO of Alameda Research, admitted to “regular amphetamine use” in an April 2021 tweet, while Mr Bankman-Fried has openly discussed his experimentation with Adderall and other stimulants.

A viral video about Alameda’s trading shows Ellison saying she could “absolutely pull it off without my math degree”. “You use very little math — you use a lot of, like, elementary school math,” she said.

There have also been allegations that a freewheeling, 10-person “sexual polycule” inside the luxury Bahamas penthouse served as the doomed operation’s headquarters.

According to a bombshell report by CoinDesk, Ellison and Bankman-Fried were part of a “cabal of roommates” who ran the crypto empire and “dated” each other, while living in a $US40 million penthouse in the Bahamas’ exclusive Albany resort.

Many of the 10 roommates, including Ellison, are Bankman-Fried’s former co-workers from trading firm Jane Street, while others he met at the Massachusetts Institute of Technology.

Also living in the house were FTX co-founder and chief technology officer Gary Wang and director of engineering Nishad Singh. “All 10 are, or used to be, paired up in romantic relationships with each other,” CoinDesk reported.

The website said it spoke to several current and former FTX and Alameda employees on the condition of anonymity. It quoted one source as saying: “The whole operation was run by a gang of kids in the Bahamas.”

— With Sarah Sharples and Frank Chung

Originally published as Sam Bankman-Fried’s company FTX owes $4.56b to 50 creditors amid crypto bankruptcy, new CEO receiving $1946 per hour