FTX in talks with regulators, may have one million creditors

Collapsed-crypto exchange FTX outlined a “severe liquidity crisis” in U.S. bankruptcy filings, which said the group could have more than 1 million creditors, as regulators opened investigations and lawmakers called for clearer rules on how the industry operates.

FTX’S filing to a U.S. bankruptcy court, published late on Monday in the United States, said it was in contact with financial regulators and had appointed five new independent directors at each of its main companies, including its sibling trading firm Alameda Research.

The exchange, which had been among the world’s largest, filed for bankruptcy protection on Friday in one of the highest-profile crypto blowups after panicked traders withdrew $6 billion from the platform in just 72 hours and rival exchange Binance abandoned a rescue deal.

“FTX faced a severe liquidity crisis that necessitated the filing of these cases on an emergency basis last Friday,” the court filing stated.

“Questions arose about Mr. Bankman-fried’s leadership and the handling of FTX’S complex array of assets and businesses under his direction.”

FTX founder and former chief executive Sam Bankman-fried said he expanded his business too fast and failed to notice signs of trouble at the exchange, the New York Times reported late on Monday.

Bankman-fried over the weekend also tried to raise cash from investors to repay FTX traders and institutional clients even after the company had sought bankruptcy protection and he had stepped down as CEO, the Wall Street Journal reported on Tuesday.