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Many FTX customers in Asia and Europe are navigating the company’s complex bankruptcy proceedings on their own, pitting them against a convoluted corner of the U.S. legal system in a language many don’t speak, WSJ Pro Bankruptcy reported. FTX built an international customer base by making crypto trading easily accessible on its app in more than a dozen languages. Now overseas traders are forced to take a crash course in esoteric chapter 11 proceedings and sift through nearly 600 court filings in English to glean what might become of their accounts. In most corporate bankruptcies, creditors are financial firms well versed in chapter 11. But FTX’s customers include many retail investors who have never dealt with chapter 11 before and don’t have the resources to hire legal help. Some non-English-speaking FTX customers try to bridge the gap with translation apps and by banding together on social media. Others rely on their lawyers to translate court documents, attempting to figure out how much they might get for their accounts. The language barrier compounds the difficult task of making accessible voluminous chapter 11 filings, leaving international customers largely in the dark. The barriers to understanding FTX’s bankruptcy have made it harder for depositors to determine their best course of action, whether they should sell their accounts now at a deep discount or hold on for potentially more money. Non-English-speaking customers may also be more likely to be shut out of a process that will determine how much money they get back because they are less likely to vote on a future bankruptcy repayment plan due to the lack of understanding.

U.S. prosecutors on Friday asked a Manhattan judge to impose tougher bail conditions on Sam Bankman-Fried, expressing concern that the founder of the FTX cryptocurrency exchange might tamper with witnesses or destroy evidence in his criminal case, Reuters reported. Citing Bankman-Fried's "recent attempts to contact prospective witnesses," prosecutors asked U.S. District Judge Lewis Kaplan to ban Bankman-Fried from communicating with current or former employees of FTX or his Alameda Research hedge fund, other than family, unless a lawyer is present. They also asked that Bankman-Fried not use Signal or other encrypted call and messaging applications, though he could still communicate through text messages, email and the phone. Bankman-Fried, 30, has been free on $250 million bond and required to live with his parents since pleading not guilty to looting billions of dollars from the now-bankrupt FTX.

FTX has objected to a U.S. Department of Justice request for an independent investigation into the once-prominent crypto exchange's collapse, saying it is already conducting a wide-ranging probe that includes family members of FTX founder Sam Bankman-Fried, Reuters reported. FTX said in a court filing in Wilmington, Delaware, late on Wednesday that the DOJ's proposed review would only add cost and delay to its bankruptcy case. FTX acknowledged "fraud, dishonesty, incompetence, misconduct, mismanagement, and irregularity" in its past conduct, but said that its previous wrongdoing is already being probed by the company's new management, its creditors and law enforcement agencies. As part of its own investigation, FTX asked U.S. Bankruptcy Judge John Dorsey, who is overseeing its chapter 11 proceedings, to help it secure documents from Bankman-Fried, members of his family and other insiders with information about FTX transactions that used "misappropriated and stolen" funds. These transactions, it said, include a $16.7 million Bahamian real estate purchase under the name of Bankman-Fried's parents, Joseph Bankman and Barbara Fried. FTX is also seeking information about political donations by Mind the Gap, a political action committee founded by Barbara Fried, and Guarding Against Pandemics, an advocacy organization founded by Sam Bankman-Fried and his brother, Gabriel Bankman-Fried. FTX said Guarding Against Pandemics' multimillion-dollar Washington, D.C., headquarters was purchased with misappropriated funds.

New Jersey-based cryptocurrency lender BlockFi has requested the court to approve bonus paychecks for its staff so the company can keep its talent throughout its bankruptcy proceedings, according to court documents filed on Monday, YahooFinance.com reported. “Despite an incredibly turbulent time in the digital asset industry, the opportunities for participants elsewhere have not dried up,” BlockFi Chief People Officer Megan Crowell said in a submitted declaration. “The war for talent remains active, and the participants have many opportunities inside and outside the cryptocurrency sector.” Last week, Zodia Markets, a digital asset exchange based in London, hired the former BlockFi head of international’s institutional sales in Asia, Paul Howard, as its own head of sales. BlockFi fired about two-thirds of its workforce and filed for chapter 11 bankruptcy in late November following the collapse of the Bahamas-based cryptocurrency exchange, FTX.com. Sam Bankman-Fried, the founder of the exchange, had agreed to a deal to rescue BlockFi from earlier financial woes in July, before FTX filed for its own bankruptcy on Nov. 11. The unsecured creditors' committee has submitted objections to BlockFi’s retention plan, while the U.S. Trustee in the case objected to the lender’s decision to seal from the public details on the proposed payments and recipients. A lawyer representing the unsecured creditors' committee argued in the court filings that BlockFi is seeking permission to spend US$12.3 million for retention payments and up to another $12 million in estate resources and fees.

Brazilian shopping chain Americanas SA yesterday filed for chapter 15 bankruptcy, a move that protects its U.S. assets while insolvency proceedings play out in its home country, Bloomberg News reported. The retailer nosedived in January after becoming mired in an accounting scandal. The firm, backed by billionaire Jorge Paulo Lemann, filed for bankruptcy at a court in Rio de Janeiro on Jan. 19. In disclosures to investors, the firm implied it misreported numbers connected to some of its financing and wrongly deducted interest paid to lenders from its liabilities. In all, there were nearly $4 billion of accounting “inconsistencies,” according to a regulatory filing.

Celsius Network LLC is considering issuing a new digital-asset token to repay creditors as part of a proposal to reorganize and exit bankruptcy as a regulated crypto platform, the company said in court yesterday, Bloomberg News reported. Reorganizing Celsius into a publicly-traded company that is properly licensed would bring in more money for creditors than selling hard-to-liquidate assets at today’s depressed prices, company attorney Ross M. Kwasteniet said during a video-court hearing. Celsius has been negotiating with various creditor groups over how to set up the new company and issue a new token to creditors as part of a payout plan, Kwasteniet told US Bankruptcy Judge Martin Glenn, who is in New York. Another troubled crypto platform had created digital assets to cover customer losses, but Celsius is likely the first crypto company to try to issue a new token — which must be blessed by a federal judge — to help buy its way out of bankruptcy. A group of creditors has been pushing Celsius to follow the example set by the Bitfinex exchange, which issued new tokens to customers who lost money due to a hack. In September, a Beijing-based provider of Bitcoin mining-pool services said it would issue tokens to clients equal to the value of various crypto assets that had been frozen.

Binance Holdings Ltd., the world’s largest crypto platform, acknowledged that it mistakenly keeps collateral for some of the tokens it issues in the same wallet as exchange-customer funds, Bloomberg News reported. Reserves for almost half of the 94 coins that Binance issues, known as Binance-peg tokens or “B-Tokens,” are currently stored in a single wallet called “Binance 8” which also holds customer assets, according to listings visible on its website on Monday. The wallet contains significantly more tokens in reserve than would be required for the amount of B-Tokens that Binance has issued, indicating that collateral is being mixed with customers’ coins rather than being stored separately, as has been done for other Binance-peg tokens according to the company’s own guidelines. “‘Binance 8’ is an exchange cold wallet. Collateral assets have previously been moved into this wallet in error and referenced accordingly on the B-Token Proof of Collateral page,” a Binance spokesperson said. “Binance is aware of this mistake and is in the process of transferring these assets to dedicated collateral wallets.” Crypto exchanges such as Binance have attempted to be more transparent about their holdings following the collapse of rival platform FTX in November, which turned the management of reserves into a hot-button issue for the crypto industry. FTX, the Bahamas-based exchange founded by Sam Bankman-Fried, allegedly allowed its sister trading firm Alameda Research unfettered access to customer assets to fuel its own bets — and with billions of dollars at stake, customers are eager to spot any potential warning signs of trouble elsewhere.

Bankrupt crypto lender BlockFi had over $1.2 billion in assets tied up with Sam Bankman-Fried’s FTX and Alameda Research, according to financials that had previously been redacted but were mistakenly uploaded yesterday without the redactions, CNBC.com reported. BlockFi’s exposure to FTX was greater than prior disclosures suggested. The company filed for Chapter 11 bankruptcy protection in late November, following the collapse of FTX, which had agreed to rescue the struggling lender before its own meltdown. The balance shown in the unredacted BlockFi filing includes $415.9 million worth of assets linked to FTX and $831.3 million in loans to Alameda. Those figures are as of Jan. 14. Both of Bankman-Fried’s firms were wrapped into FTX’s November bankruptcy, which sent the crypto markets reeling. Lawyers for BlockFi had said earlier that the loan to Alameda was valued at $671 million, while there were an additional $355 million in digital assets frozen on the FTX platform. Bitcoin and ether have since rallied, lifting the value of those holdings.

Over the past few years, a number of companies have attempted to act as the cryptocurrency equivalent of a bank, promising lucrative returns to customers who deposited their bitcoin or other digital assets, according to an Associated Press analysis. In a span of less than 12 months, nearly all of the biggest of those companies have failed spectacularly. Last week, Genesis filed chapter 11, joining Voyager Digital, Celsius and BlockFi on the list of companies that have either filed for bankruptcy protection or gone out of business. This subset of the industry grew as cryptocurrency enthusiasts were looking to build their own parallel world in finance untethered to traditional banking and government-issued currencies. But lacking safeguards, and without a government backstop, these companies failed in domino-like fashion. What started with one crypto company collapsing in May spilled over onto one crypto lending firm and then the next. Further, government regulators started clamping down on crypto lending companies’ ability to advertise their services, saying that their products should have been regulated by securities regulators. The collapse is reminiscent of the 2008 financial crisis, but on a much smaller scale. There are no worries that the collapse of these crypto firms will impact the broader economy.