FTX Collapse Ensnares Large and Small Creditors Around the World


From a German bank seeking a payment of more than $2 million to a Chinese investor requesting $21,000 in lost savings. Plaintiffs around the world involved in the epic collapse of FTX Group are beginning to appear in lawsuits.

And unlike the very largest creditors, the plaintiffs’ names have not been redacted, according to documents recently released in Delaware. They provide insight into the sprawling nature of Sam Bankman-Fried’s crypto empire – and the daunting task insolvency practitioners face in figuring out who owes what. The case involves more than a million creditors and could take years to complete.

Creditors caught up in the collapse of FTX, which was once one of the largest crypto exchanges in the world, include a Frankfurt-based financial institution. Bankhaus Scheich Wertpapierspezialist AG says it is owed $2.3 million by FTX for deposits including Bitcoin, Ethereum and dollars, according to filings. A company spokesperson confirmed the claim when contacted by Bloomberg News, saying it traded on FTX for hedging purposes and that client funds were not affected.

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Creditors attached trading account screenshots or emails they received from FTX as proof of what they owed.

“I want to know how I can get my money back, after all, that’s all my savings from the past few years,” said a Chinese creditor whose claim is worth just over $21,000. “I really need your help.”

The plaintiffs cited in this article were contacted for comment by Bloomberg News, with several declining to comment.

FTX outage

A slew of claims that have been made public come from investors in Taiwan. And a handful are issued among those with addresses in China, the filings show, where crypto trading is subject to regulatory action. Reto Stiffler, a former fund manager of GAM Holding AG, also filed a claim worth $895,000.

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FTX owes its 50 largest unsecured creditors a total of $3.1 billion, according to a filing with a Delaware court on Sunday that did not reveal the identities of any of the plaintiffs. Two of the exchange’s clients owe more than $200 million, the filing shows. The 50 largest claims all come from customers with debts of $21 million or more.

It remains unclear how much money will be generated by the liquidation of FTX, and it is possible that many creditors will receive only fractions of what they owe, if at all. The process can take months in smaller cases and years for larger multi-billion dollar bankruptcies. The alleged debts, which are typically unsecured, will be subject to a process designed to weed out false, inflated or duplicate claims. Traders can buy up the claims – and monetize them by waiting for the largest possible payout.

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Meanwhile, a hedge fund run by a subsidiary of German crypto player Immutable Insight says it has been exposed to the fallout from FTX and says it owes $1.6 million.

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“We took prompt action to immediately reduce any exposure, and as a result, some initiated withdrawals were not processed,” a spokesperson for investment vehicle BlockchainFonds said in an email. “BlockchainFund has no direct exposure to Alameda Research or FTT token.”

–With assistance from Steven Church, Donal Griffin, Anna Irrera, and Cindy Wang.

Photo: In this photo illustration, the FTX logo is seen on a computer on November 10, 2022 in Atlanta, Georgia. Photo credit: Michael M. Santiago/Getty Images


Copyright 2022 Bloomberg.

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