FTX's new CEO John Ray, described the "unprecedented" chaos at the company in the bankruptcy court filings on Nov 17.NEW YORK — Crypto exchange FTX filed for Chapter 11 bankruptcy protection in the US last Friday , saying it could owe money to more than one million creditors.
Ray said his immediate priorities are locating and securing assets, investigating claims against insiders like former FTX CEO Sam Bankman-Fried, and cooperating with dozens of regulatory investigations in the US and abroad. FTX did not record customer deposits as balance sheet assets, and balance sheets prepared under Bankman-Fried's leadership cannot necessarily be trusted, Ray wrote.
The US government will not step in to cover customer deposits as they would in a traditional bank failure, so customers will have to rely on the bankruptcy process.A Chapter 11 case halts attempts to recoup assets from a bankrupt company, so customers will have to wait for the bankruptcy court to determine how much, if anything, they will get back.
That means the crypto would be pooled with all of the bankrupt company's assets and divided to pay all creditors. In that scenario, customers would have what are known as unsecured claims that would be relatively low in priority.
Source: News Formal (newsformal.com)
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