FTX seeks court relief to pay critical vendors
New details have emerged about the bankrupt crypto exchange FTX, as executives scramble to pay critical vendors.
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Collapsed crypto exchange FTX has launched a strategic review of its global assets amid preparations for the sale and potential reorganisation of businesses.
The review was announced on Saturday after FTX and 101 affiliated firms, including Alameda Research, requested court relief to help pay critical vendors.
The exchange and its affiliates filed for bankruptcy on November 11 in one of the biggest crypto implosions, leaving around ONE million customers and investors facing billions in losses.
Bankman-Fried also stepped down as CEO and was replaced by restructuring expert John Ray.
In a court filing, FTX requested permission to pay $US9.3 million in claims to vendors and up to $US17.5 million after the final order.
FTX claims if the request is dismissed by the court, it will lead to “immediate and irreparable harm” to the business.
“Based on our review over the past week, we are pleased to learn that many regulated or licensed subsidiaries of FTX, within and outside of the United States, have solvent balance sheets, responsible management and valuable franchises,” CEO John Ray said.
“I respectfully ask all of our employees, vendors, customers, regulators and government stakeholders to be patient with us as we put in place the arrangements that corporate governance failures at FTX prevented us from putting in place prior to filing our chapter 11 cases.”
The move comes after former CEO Sam Bankman-Fried reportedly gifted himself a $US300 million windfall last year when the exchange secured a $US420 million fundraising round from 69 different investors.
From the total, $US300 million went to Mr Bankman-Fried after he sold a portion of his personal stake in FTX, citing financial records and people familiar with the transaction, the Wall Street Journal reported.
The Journal said it was unable to determine what Mr Bankman-Fried did with the $US300 million – though a 2021 financial statement said the company kept the funds for “operational expediency” on behalf of a “related party.”
At the time, FTX was valued at a whopping $US25 billion – a valuation that completely evaporated by last week, when the platform abruptly filed for bankruptcy.
Mr Bankman-Fried’s personal fortune also plummeted from $US16 billion to zero in a few days.
Mr Bankman-Fried’s management of finances is under the microscope following the FTX’s bankruptcy announcement last week.
The ex-CEO funnelled $US10 billion in FTX client funds to Alameda Research – his sister cryptocurrency trading firm – and approximately $US1 billion remains unaccounted for.
The doomed crypto firm's’s headquarters in the Bahamas is also under fire following speculation about executives’ sex lives and alleged substance abuse.
Mr 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, the New York Post reports.
Ms 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.
Originally published as FTX seeks court relief to pay critical vendors
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