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Drugmaker Mallinckrodt said yesterday that it has emerged from bankruptcy and reduced its total funded debt by about $1.9 billion, Reuters reported. Mallinckrodt, which won court approval for its bankruptcy plan last month, said it is moving ahead with ample liquidity to execute its strategic priorities. Pursuant to the bankruptcy plan, ownership of the company will now be handed over to its lenders and all its equity shares would cease to exist. Mallinckrodt, which makes branded and generic drugs, first filed for bankruptcy in 2020 to address its high debt load, litigation over its allegedly deceptive marketing of highly addictive generic opioids and drug pricing disputes. Despite the previous bankruptcy settlement that resolved those litigation threats and cut $1.5 billion in debt, the company quickly found itself in financial trouble again due to declining sales for its key branded drugs, including Acthar Gel. Mallinckrodt said on Tuesday it will continue operating its Specialty Generics under the oversight of an independent monitor and operate in compliance with other existing Acthar-related settlement conditions.

Collapsed cryptocurrency exchange FTX, the biggest casualty of the “crypto winter” last year, just hit the first anniversary of its bankruptcy filing. Crypto lender Celsius Network, which collapsed in the summer of 2022, was cleared to exit bankruptcy last week. Their failures, along with those of crypto industry players like Voyager Digital and BlockFi, have tested a bankruptcy system with little experience with a decentralized and volatile sector with difficult to trace and value assets, WSJ Pro Bankruptcy reported. Many factors have led crypto bankruptcies like FTX’s to drag on as so-called free fall cases, or when companies file for bankruptcy protection without restructuring agreements with creditors in place. “The sheer fact that we are talking about this case a year later is different from what we’ve been seeing in the bankruptcy landscape,” said Timothy Graulich, head of international restructuring at Davis Polk & Wardwell. The law firm represents several large customers in FTX’s bankruptcy. Businesses often seek chapter 11 protection with prepackaged restructuring agreements and hope to reorganize quickly, so “It is really only free fall cases that last this long,” said Graulich.

FTX’s bankruptcy advisers sued crypto exchange Bybit Fintech Ltd and two corporate affiliates to recover cash and digital assets valued at roughly $953 million that was withdrawn from Sam Bankman-Fried’s crypto exchange before it filed chapter 11 a year ago, Bloomberg News reported. The lawsuit filed Friday in Delaware court alleges Bybit’s investment arm, Mirana Corp., had special “VIP” benefits, which most FTX customers didn’t have, and used those special privileges to get most of its assets off Bankman-Fried’s platform before it collapsed in November 2022. Mirana pressured FTX employees to fulfill its withdraw requests as regular customers of FTX.com waited hours trying to get money off the exchange as it collapsed, according to the complaint. The lawsuit seeks to recover assets worth roughly $953 million, a figure that includes more than $327 million Mirana allegedly withdrew from FTX between the early morning of Nov. 7 and Nov. 8 2022, when Bankman-Fried’s exchange paused withdraws. The bankruptcy lawsuit names Bybit Fintech Ltd., Mirana and an affiliated crypto trading firm named Time Research Ltd. The lawsuit also lists as defendants a senior Mirana executive at the time and Singaporean residents whom the complaint alleges either benefited or had a role in the FTX withdraws, which are subject to the bankruptcy suit.

A year after the bankruptcy of FTX, the cryptocurrency industry is irrevocably altered — while at the same time in many ways remarkably familiar, Bloomberg News reported. Mostly gone are the day traders and the abundant leverage that drove Bitcoin to its November 2021 high at close to $69,000. Same for celebrities and social-media influencers peddling nonfungible tokens and memecoins. Regulators determined not to get caught off guard again are tightening their grip. And large financial firms like BlackRock Inc. are moving in, drawn by the prospect of the U.S. Securities and Exchange Commission giving its first blessing for an ETF investing directly in Bitcoin. Perhaps the most tangible indicator that crypto has moved on: Bitcoin has recovered all its losses since the May 2022 implosion of stablecoin TerraUSD, which set in motion the wave of failures that ultimately helped bring down FTX. Some observers see an industry still afflicted by rampant speculation and insufficient safeguards. The Tether stablecoin, a pillar of the sector long dodged by speculation about the quality of assets backing it and allegations that it’s being used by criminals, has become more dominant in recent months. Binance, the biggest exchange, still operates without a formal headquarters.

A top financial regulator is crafting a plan to ensure that more derivatives exchanges keep client funds separate from their corporate cash, the latest response by U.S. policymakers to the havoc wrought by fallen crypto giant FTX, Bloomberg News reported. A draft proposal being worked on by the Commodity Futures Trading Commission would expand the scope of existing regulatory defenses to apply to exchanges that let customers trade without going through a brokerage. A version of those limits helped keep FTX from raiding customer funds at its LedgerX subsidiary, a former unit of Sam Bankman-Fried’s sprawling crypto universe that was overseen by the CFTC, according to one of the agency’s commissioners. The CFTC required the firm to separate customer and company assets as a condition for letting it offer crypto derivatives fully backed by collateral directly to customers. Kristin Johnson, a Democratic member of the CFTC, said rules requiring segregation of customers assets should apply to any firms using or seeking similar direct-to-customer models, whether they’re offering crypto products or other types of derivatives. That argument is bolstered by LedgerX’s insulation from the broader crumbling of the FTX empire and a desire to avoid such crises going forward. The CFTC should act immediately to put in place rules to prevent misuse or loss of customer funds, in light of events like FTX’s collapse, Johnson said. “This is especially critical when we are considering direct-to-retail market structures for complex financial products, like leveraged, crypto derivatives transactions, and particularly important when permitting untested liquidation and resolution approaches,” she said.

A company run by former New York Stock Exchange President Tom Farley is among three suitors vying to buy the remnants of FTX, as the auction for the collapsed cryptocurrency exchange founded by Sam Bankman-Fried reaches its final stages, the Wall Street Journal reported. Bullish, the crypto exchange run by Farley, fintech startup Figure Technologies and crypto venture-capital firm Proof Group are competing to buy FTX, according to people familiar with the matter. The winner could restart the exchange after its planned exit from bankruptcy next year. A banker advising FTX on the process said at a hearing last month that the company received interest from over 70 parties and narrowed it to three, without naming them. A winner could be picked in December. CoinDesk earlier reported on Proof’s bid; the other two haven’t been previously reported. There are no guarantees a deal will come together, and another suitor could yet emerge. As recently as last fall, FTX ranked as one of the world’s biggest crypto exchanges, handling billions of dollars in trading volumes for individual investors outside the U.S. and professional traders. Venture capitalists valued FTX at $32 billion in January 2022, making Bankman-Fried a billionaire several times over. It collapsed abruptly in November 2022 following a run on FTX customer funds. Prosecutors charged Bankman-Fried with fraud, accusing him of using a back door to plunder billions of dollars of customer funds and spend it on luxury real estate, personal investments and political donations. A New York federal jury last week convicted him on all seven counts he faced. He is expected to be sentenced in March and faces up to 110 years in prison.

Sam Bankman-Fried’s criminal fraud conviction came just as the FTX implosion was approaching its first anniversary. But for others who helped promote the cryptocurrency exchange, the legal fallout will continue for years, Bloomberg News reported. Attention now turns to a sweeping class-action suit in Miami federal court by investors who claim they lost billions in the collapse of FTX and seek to pin blame not just on Bankman-Fried and his inner circle, but also on celebrities who were paid to endorse it to the masses, as well as bankers, accountants and lawyers who propped up the empire’s legitimacy. Flashy advertisements featuring Larry David and Tom Brady touting FTX were among the very first bits of evidence shown to the jury at the start of a monthlong trial in Manhattan that culminated in Bankman-Fried being found guilty last week of seven counts of fraud and conspiracy. The class action, which seeks to cover hundreds of thousands of investors, alleges that celebrity endorsers and firms that provided financial and legal services to FTX would have seen red flags about the business if they had done proper due diligence. The Miami case seeks unspecified damages for the $8 billion that FTX allegedly “stole” from investors — and most of which “vanished.” The guilty verdict for Bankman-Fried doesn’t directly establish a central contention in the class action — that dozens of celebrities and other alleged enablers should have known he was up to no good when they signed on as advisers or brand ambassadors. But the 31-year-old’s conviction for what Manhattan’s top federal prosecutor Damian Williams called “one of the biggest financial frauds in American history” will add momentum to the investors’ case, according to Daniel Richman, a professor at Columbia Law School.

In a closing argument, a prosecutor told New York jurors Wednesday to follow the overwhelming evidence of FTX founder Sam Bankman-Fried 's “pyramid of deceit” to find him guilty of defrauding customers and investors of at least $10 billion, while a defense lawyer said prosecutors were unfairly portraying an honest entrepreneur as a monster, Reuters reported. Assistant U.S. Attorney Nicolas Roos launched a day of closings in Manhattan federal court by saying Bankman-Fried was at fault for stealing billions of dollars from investors worldwide despite four days of testimony in which Bankman-Fried insisted that he was unaware that his customers' deposits were at risk until weeks before his companies collapsed. “He told a story and he lied to you,” Roos told jurors a day after Bankman-Fried concluded his testimony at the monthlong trial. The prosecutor said Bankman-Fried wanted jurors to believe that he had no idea what was happening at his companies or what was happening was wrong, but that his words conflicted with the testimony of his fellow executives, his “partners in crime,” and other evidence including financial documents and public statements Bankman-Fried had made.

Crypto exchange Bittrex received bankruptcy court approval on Monday to shut down its U.S. operations after a months-long effort to return crypto deposits to customers, Reuters reported. U.S. Bankruptcy Judge Brendan Shannon approved Bittrex's bankruptcy plan at a court hearing in Wilmington, Del., clearing the company to emerge from bankruptcy with a wind-down plan that would pay remaining creditors in full. Bittrex filed for bankruptcy protection in May, shortly after the U.S. Securities and Exchange Commission charged it with operating an unregistered securities exchange. Bittrex chose to shut down its U.S. operations and return assets to customers in the wake of the SEC complaint. It reached a $24 million settlement with the SEC in August. Seattle-based Bittrex said the bankruptcy filing would not impact Bittrex Global, which serves customers outside the United States. The company's non-U.S. operations are based in Liechtenstein.

Over and over on Tuesday, Sam Bankman-Fried, the founder of the failed FTX cryptocurrency exchange, denied knowing that billions of dollars in customer money had been misappropriated until shortly before his company collapsed last year, as a federal prosecutor grilled him for a second day in his criminal fraud trial, the New York Times reported. The 31-year-old onetime crypto mogul fumbled for an answer when the prosecutor, Danielle Sassoon, repeatedly asked whether he had told his employees not to spend FTX customer money on investments, pricey real estate and other expenditures. Mr. Bankman-Fried also couldn’t name any employees who might have authorized the use of FTX customer money for that spending. “I don’t recall giving any direction,” Mr. Bankman-Fried said three times about the spending of FTX customer money before he concluded his testimony. Both sides rested their case before lunchtime on Tuesday, with closing statements set to unfold on Wednesday. Mr. Bankman-Fried was on the stand for a third day testifying before a jury in his own defense for a trial that has come to symbolize the highs and lows of the volatile crypto industry. The entrepreneur has been accused of masterminding a yearslong fraud to steal as much as $10 billion from FTX’s customers and then funneling the money to extravagant real estate purchases and other spending, as well as using the funds to prop up a crypto trading firm he also founded, Alameda Research. FTX, which was valued at $32 billion at its peak, imploded spectacularly last year, leaving many customers unable to recover their deposits. Mr. Bankman-Fried has pleaded not guilty to seven counts of fraud, conspiracy and money laundering. If convicted, he could face what amounts to a life sentence.