According to court documents, bankrupt crypto exchange FTX may have more than one million creditors and has been in contact with "dozens" of regulators around the world.
When it filed for Chapter 11 bankruptcy protection last week, FTX stated that it had over 100,000 creditors with claims in the case.
However, in an updated filing on Tuesday, the company's lawyers stated, "In fact, there could be more than one million creditors in these Chapter 11 Cases."
Prior to its collapse, FTX provided both novice and experienced traders with spot crypto investments as well as more complex derivatives trading. The website had over 1 million members at its height and was valued by investors at $32 billion. Investors have sold their positions and moved money off exchanges as a result of the company's bankruptcy, which has had a chilling impact on the industry.
Sam Bankman-Fried, the exchange's 30-year-old founder and one of the faces of the crypto industry, was criticized for his role in the liquidity crisis that led to FTX's collapse, and new information about it was provided in the bankruptcy court documents.
According to FTX's attorneys, regulatory bodies from all around the world are showing "substantial interest in these events" in documents dated Monday.
According to the filing, five new independent directors have been appointed at each of FTX's main parent companies, including former Delaware district judge Joseph J. Farnan, who will serve as lead independent director.
Concerns about FTX's financial health prompted a surge in withdrawals and a drop in the value of its native FTT coin on Friday. Bankman-Fried stepped down as CEO and was succeeded by John J. Ray III.
FTX initially resorted to Binance for a rescue deal, but this failed after Binance withdrew on the grounds of allegedly mishandled customer cash and U.S. government investigations into FTX. Over the weekend, FTX appeared to be the victim of a cyberattack that led to the theft of tokens valued at more than $400 million.
According to CNBC, FTX's sister company, Alameda Research, borrowed billions of dollars in customer funds from the exchange to undertake hazardous leveraged trades, leaving FTX unprepared when customers wanted to withdraw their money.
U.S. securities legislation generally prohibits trading in client funds without the customers' authorization and prohibits mixing customer funds with counterparties. It also violates the terms of service of FTX.
This year has seen a number of crypto firms fail, including Celsius and Voyager Digital, as they deal with a drop in digital asset prices and the resulting liquidity concerns.
