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Besides the more than 200 affiliated companies FTX named in the bankruptcy filing last week, many creditors are likely to go out of business.
The total number of creditors on the now-bankrupt FTX Derivatives Exchange has now being projected to be up to 1 million. This new figure was unveiled in a new court filing published on Monday, further compounding the bankruptcy proceedings that many have already predicted will be so convoluted to untangle.
When the company filed for bankruptcy last Friday, it said its liabilities were in the range of $10 billion to $50 billion, noting that its assets are also around that range. At the time, the company said its creditors were about 100,000 before expanding the number in this latest filing.
“As set forth in the Debtors’ petitions, there are over one hundred thousand creditors in these Chapter 11 cases,” according to the court filing added to the federal court database system on Monday. “In fact, there could be more than one million creditors.”
The collapse of FTX is best tagged as one of the sad wonders in the digital currency ecosystem of today. The firm a little more than a week ago was one of the most valuable digital currency companies, however, a few missteps from its founder and former Chief Executive Officer Sam Bankman-Fried fueled a liquidity crunch, characterized by massive withdrawals from the platform.
FTX Creditors to Feel the Weight Across the Board
The collapse of FTX has sent shockwaves to the industry and many are bound to start feeling the weight and the implication moving forward. Besides the more than 200 affiliated companies it named in the bankruptcy filing last week, many creditors are likely to go out of business.
Taking to Twitter, Travis Kling, the founder of Ikigai Fund, an Asset Management Firm in the crypto industry said the implosion of FTX may be the straw that broke the camel’s back as it has funds locked up in the firm.
“Unfortunately, I have some pretty bad news to share. Last week Ikigai was caught up in the FTX collapse. We had a large majority of the hedge fund’s total assets on FTX. By the time we went to withdraw Monday mrng, we got very little out. We’re now stuck alongside everyone else,” he shared in his tweet, adding that “Over the coming weeks and months, the timeline and potential recovery for FTX customers will become clearer. Right now, it’s really hard to say. At some point, we’ll be able to make a better call on whether Ikigai is going to keep going or just move into winddown mode.”
Over the coming weeks and months, the timeline and potential recovery for FTX customers will become clearer. Right now, it’s really hard to say. At some point, we’ll be able to make a better call on whether Ikigai is going to keep going or just move into winddown mode.
— Travis Kling (@Travis_Kling) November 14, 2022
The extent of the devastation caused is yet to be known and more details will be revealed in the coming weeks. For now, experts are predicting the losses that will be suffered may be at par with those from the collapse of Terra (LUNA), Celsius Network, and Voyager Digital on a comparative basis.