Global investigators pounce as FTX collapse leaves potentially 1mn creditors

The collapse of Sam Bankman-Fried’s cryptocurrency empire has sparked a vast global investigation, with dozens of authorities from around the world circling the company as it faces more than 100,000 creditors in bankruptcy proceedings.

FTX said in court filings it was in contact with US federal prosecutors, the Securities and Exchange Commission and “dozens of federal, state and international regulatory agencies” in the three days since the cryptocurrency exchange and more than 100 affiliated companies filed for Chapter 11 bankruptcy in Delaware.

The companies face at least 100,000 creditors, but that number could expand to more than 1mn, according to the filing.

“There is substantial interest in these events among regulatory authorities around the world,” the filing said.

The statements provide another indication of the sprawling scale of the multibillion-dollar bankruptcy of Bankman-Fried’s digital asset group, and the intense legal and regulatory scrutiny of the 30-year-old former billionaire’s businesses.

“The events that have befallen FTX over the past week are unprecedented,” the court filing said. “Barely more than a week ago, FTX, led by its co-founder Sam Bankman-Fried, was regarded as one of the most respected and innovative companies in the crypto industry.”

The US filing comes after financial regulators in the Bahamas appointed liquidators to run a key FTX entity as the country’s authorities seek to protect global creditors.

The Securities Commission of The Bahamas said on Monday it had won court approval to appoint two partners from PwC, one based in the Bahamas office and the second in Hong Kong, to oversee the unwinding of FTX Digital Markets, an entity at the centre of the crypto group’s vast trading platform.

It has also sought approval to appoint Brian Simms KC, a senior partner at law firm Lennox Paton, as provisional liquidator.

Authorities in the Caribbean nation, where Bankman-Fried lived, are investigating FTX, which used its Nassau base to build a crypto derivatives trading operation that accepted money from thousands of customers around the world.

“Given the magnitude, urgency and international implications of the unfolding events with regard to FTX, the commission recognised that it had to, and moved swiftly . . . to further protect the interests of clients, creditors and other stakeholders globally,” the commission said.

The move came after the Royal Bahamas Police confirmed on Sunday that they were working with the financial regulator “to investigate if any criminal misconduct occurred”.

The US Securities and Exchange Commission has recently widened an investigation into FTX, which includes a probe of its crypto lending products as well as its management of customer funds, according to a person familiar with the matter.

In a nod to the international dimension of the sprawling company’s collapse, authorities in the Bahamas said they expect “to engage with other supervisory authorities on a regulator-to-regulator basis as this event is multijurisdictional in nature”.

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