FTX Reveals Top 50 Creditors Are Owed $3.1 Billion, Seeks To Keep Their Names Confidential

Amid the frenzied scramble to divulge all of FTX’s dirty secrets, including where the fate of those $8 billion in stolen client funds which were handed over to Alameda ahead of the largest crypto exchange bankruptcy in history, there is one topic that the company’s new CEO (and one-time Enron liquidator) John J. Ray wants to keep under wraps: the identity of its creditors (and FTX clients).

Consider the following curious sequence of events that developed over the past week (conveniently summarized by the FT’s Kadhim Shubber): on Monday, FTX said that it will file a list of its top 50 creditors “on or before November 18”).

Just one day later, in John J. Ray’s Affidavit in Support of First Day Motion, FTX revealed that this may be a problem since “the Debtors are unable to create a list of their top 50 creditors that includes customers without access tot he data repositories at issues.”

Fast forward to Saturday when in a surprise twist, the Enron liquidator is now asking the judge to keep the names of the company’s creditors and customers (which we assume have been identified), confidential in order to “protect the estate or any entity in respect of a trade secret or other confidential research, development or commercial information.”

In retrospect, considering that FTX previously estimated that it has over 1 million creditors – which ostensibly includes all clients of the FTX brokerage from the smallest mom and pop investors to massive Chinese money laundering whales – this is probably not all that surprising, although it will be interesting to see how Judge John Dorsey, who is the appointed Delaware Bankruptcy Court judge on the FTX bankruptcy, will rule on November 22, 2022 at 11:00 a.m. (at Courtroom #5 on the 5th floor at 824 North Market Street in Wilmington) when the First Day hearing takes place.

As an aside, since the creditors of FTX also includes FTX clients, one wonders if there is a political push to keep certain names hidden, despite official denials?

A fundraising crypto foundation @_AidForUkraine used @FTX_Official to convert crypto donations into fiat in March. Ukraine’s gov never invested any funds into FTX. The whole narrative that Ukraine allegedly invested in FTX, who donated money to Democrats is nonsense, frankly 🤦‍♂️

— Alex Bornyakov (@abornyakov) November 14, 2022

And then of course, this:

Tangentially, as the FT notes 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.”

And in a separate filing pushed out later on Saturday, FTX published a list of its top unsecured 50 creditors – with all names and addresses redacted – which shows that the largest creditor (or is that FTX customer) had $226 million parked at the company, and that all of the top 10 creditors had over $100 million in debt with FTX.

In total, FTX owed its top 50 creditors a total of $3.1 billion. The full list of the 50 unnamed creditrs can be found here.

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

FTX also disclosed that the new CEO Ray is billing his time at $1,300 an hour and had been paid a $200k retainer fee.

The bankrupt exchange also retained three new executives to assist in the bankruptcy including a chief financial officer.

Tyler Durden
Sun, 11/20/2022 – 13:30

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