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FTX in an emergency court filing yesterday said that evidence suggests Bahamian regulators directed former CEO Sam Bankman-Fried to gain “unauthorized access” to FTX systems to obtain digital assets belonging to the company after it had filed for bankruptcy protection, CNBC.com reported. The filing said that Bankman-Fried transferred those assets to the custody of the Bahamian government. It cites an interview published by Vox on Wednesday where Bankman-Fried expresses serious disdain for regulators. “F--- regulators,” he said in the interview. “They make everything worse. They don’t protect customers at all.” “You know what was maybe my biggest single f----p?” he asked. “Chapter 11.” The accusations were made by FTX in a motion in the U.S. Bankruptcy Court in Delaware. In that motion, FTX said the alleged conduct puts “in serious question” a request by Bahamian regulators for recognition as liquidators in the bankruptcy.

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, Reuters reported. FTX's filing to a U.S. bankruptcy court, published late on Monday in the U.S., said that 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 Trading's new CEO John J. Ray III, a lawyer tapped to lead the collapsed crypto exchange's restructuring, previously oversaw the $23 billion bankruptcy of energy firm Enron Corp and has a reputation for boosting creditor recoveries, Reuters reported. Ray took over from founder Sam Bankman-Fried as FTX's chief executive after a disastrous week for the company that started with a quickly abandoned buyout effort from rival exchange Binance Inc. and culminated in a chapter 11 filing in Delaware on Friday. In Ray's first few days as boss, the company has been hit by regulatory probes in various jurisdictions and reports of a hack of FTX apps and $1 billion of missing customer funds. Ray said on Saturday the company was working with law enforcement and regulators to mitigate the problems and making "every effort" to secure assets. Ray is no stranger to high-profile restructurings and is perhaps best known for his work on Enron, which filed for bankruptcy in 2001 amid revelations of widespread accounting fraud and corruption. Serving as Enron's CEO throughout its years-long bankruptcy, Ray's work resulted in major settlements with banks accused of helping Enron deceive investors, including a $1.66 billion settlement with Citigroup in 2008.

In less than a week, the cryptocurrency billionaire Sam Bankman-Fried went from industry leader to industry villain, lost most of his fortune, saw his $32 billion company plunge into bankruptcy and became the target of investigations by the Securities and Exchange Commission and the Justice Department, the New York Times reported. But in a wide-ranging interview on Sunday that stretched past midnight, he sounded surprisingly calm. “You would’ve thought that I’d be getting no sleep right now, and instead I’m getting some,” he said. “It could be worse.” The empire built by Mr. Bankman-Fried, who was once compared to titans of finance like John Pierpont Morgan and Warren Buffett, collapsed last week after a run on deposits left his crypto exchange, FTX, with an $8 billion shortfall, forcing the firm to file for bankruptcy. The damage has rippled across the industry, destabilizing other crypto companies and sowing widespread distrust of the technology. Besides some Twitter posts, messages to employees and occasional texts to reporters, Mr. Bankman-Fried, 30, has said little publicly over the last week. In the interview on Sunday, he voiced numerous regrets over the collapse of FTX. But he would offer only limited details about the central questions swirling around him: whether FTX improperly used billions of dollars of customer funds to prop up a trading firm that he also founded, Alameda Research. The Justice Department and the S.E.C. are examining that relationship.

Cryptocurrency lender BlockFi said on Monday it has significant exposure to Sam Bankman-Fried's crypto exchange FTX, and associated entities, that last week filed for bankruptcy, Reuters reported. FTX founder Bankman-Fried also resigned as chief executive, after the biggest blowup in the crypto industry drew calls for tighter regulation. "We do have significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX.US," BlockFi said. It added that withdrawals from its platform continue to be paused and clients have been asked to not to submit any deposits to BlockFi wallet or interest accounts. The crypto industry has been bracing for a fallout of the FTX collapse with several firms counting their exposure in millions to the beleaguered firm. In July, FTX had signed a deal with BlockFi to provide it with a $400 million revolving credit facility with an option to buy it for up to $240 million.

On Nov. 7, Sam Bankman-Fried, the chief executive of the cryptocurrency exchange FTX, took to Twitter to reassure his customers: “FTX is fine,” he wrote. “Assets are fine.” On Friday, FTX announced that it was filing for bankruptcy, capping an extraordinary week of corporate drama that has upended crypto markets, sent shock waves through an industry struggling to gain mainstream credibility and sparked government investigations that could lead to more damaging revelations or even criminal charges, the New York Times reported. In a statement on Twitter, the company said that Mr. Bankman-Fried had resigned, with John J. Ray III, a corporate turnaround specialist, taking over as chief executive. The speed of FTX’s downfall has left crypto insiders stunned. Just days before filing, Mr. Bankman-Fried was considered one of the smartest leaders in the crypto industry, an influential figure in Washington who was lobbying to shape regulations. And FTX was widely viewed as one of the most stable and responsible companies in the freewheeling, loosely regulated crypto industry. Now, the bankruptcy has set up a rush among investors and customers to salvage funds from what remains of FTX. A surge of customers tried to withdraw funds from the platform this week, and the company couldn’t meet the demand. The exchange owes as much as $8 billion, according to people familiar with its finances. FTX’s collapse has destabilized the crypto industry, which was already reeling from a crash in the spring that drained $1 trillion from the market. The prices of the leading cryptocurrencies, Bitcoin and Ether, have plummeted. The crypto lender BlockFi, which was closely entangled with FTX, announced on Thursday that it was suspending operations as a result of FTX’s collapse.
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Bankrupt cryptocurrency exchange FTX is probing a potential hack and asked customers to stay off the FTX website, the company said. More than $370 million worth of crypto funds appears to be missing, according to crypto analytics firm Elliptic Enterprises Ltd, the Wall Street Journal reported. A rival crypto exchange said Saturday it knew the identity of the alleged hacker and would help authorities in their investigation. The potential hack occurred Friday after FTX filed for bankruptcy. Ryne Miller, FTX US’s general counsel, said in a Saturday tweet that FTX and FTX US had started moving all digital assets to cold storage — crypto wallets that aren’t connected to the internet — after the bankruptcy filing. FTX is “investigating abnormalities with wallet movements related to the consolidation of FTX balances across exchanges,” Mr. Miller said on Twitter. He called the movements unauthorized transactions and said the facts are still unclear. FTX will “share more info as soon as we have it,” he said.
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​​In related news, the collapse of crypto exchange FTX has tripped up casual day traders and professional investors alike, the Wall Street Journal reported. Some 10% of the assets of a Multicoin Capital hedge fund are stuck at FTX, according to an investor letter viewed by the Wall Street Journal. It was able to pull out around 24% of fund assets held there before withdrawals were halted, the letter said. Earlier this month it told investors the fund was $1.2 billion in size. The trading desks and lenders that serve institutional investors are in limbo, too. Cryptocurrency lender BlockFi Inc. has paused withdrawals and limited activity on its platform, saying FTX’s woes were preventing it from operating as usual. Another crypto lender, Genesis, said some $175 million from its derivatives business was frozen in an FTX trading account. Crypto market maker B2C2, which matches trades between other entities, has $5 million stuck on FTX. Read more. (Subscription required.)