Sam Bankman-Fried’s FTX fiasco has muddled the financial world, leading to Bankman-Fried stepping down from his CEO post while FTX and its affiliates apply for bankruptcy. Following this, the cryptocurrency exchange platform said on Saturday, November 19, that it owed roughly $3.1 billion to its 50 major creditors. Surprisingly, FTX has more than a million creditors combined across all its platforms.
Having said that, the new CEO, John J. Ray, has boasted about the possibility of recovering assets to pay off the creditors. The investment bank, Perella Weinberg Partners LP (NASDAQ:PWP), hired to help the exchange through the liquidation proceedings, discovered that there may be over 200 accounts with positive cash balances.
Nonetheless, regulatory scrutiny by authorities in the Bahamas and the U.S. is complicating the liquidation proceedings and efforts by the new management to reign in the exchange. At the crux of the fiasco are the man himself, Bankman-Fried, FTX co-founder Gary Wang, Director of Engineering at FTX Nishad Singh, and Alameda Research’s CEO, Caroline Ellison.
The ripple effect of the FTX fallout has dragged down the prices of cryptocurrencies. Two dominant cryptocurrencies, Bitcoin (BTC-USD) and Ethereum (ETH-USD), have lost over 70% in the past year. Importantly, in November alone, Bitcoin plunged nearly 22%.