It’s difficult to overstate the scope of the collapse of Sam Bankman-Fried’s crypto exchange FTX. Following a sequence of increasingly risky financial maneuvers — including alleged “borrowing” of billions of dollars from customer accounts to fund leveraged trades by sister company Alameda Research — the company filed for bankruptcy this November, indicating it had 100,000 creditors or more at stake in its proceedings.
Unfortunately for the onetime superstar fintech, its financial woes are worse than initially thought — at least ten times worse. In an updated filing on November 15, FTX’s lawyers amended that 100,000 figure, writing: “In fact, there could be more than one million creditors in these Chapter 11 cases.”
Needless to say, such a long list of creditors strains the usual practices of bankruptcy proceedings. While usually it is required for debtor companies or individuals to list every creditor who has a stake in the bankruptcy, to date FTX has provided only an abbreviated list of its top twenty creditors. The creditors of other folded crypto companies have often ended up embroiled in long, difficult legal entanglements to recoup their losses, which does not bode well for FTX’s remaining 999,980 creditors.