U.S. DOJ Appoints Nine-Member Creditors’ Committee to Represent FTX Account Holders

The committee will represent junior creditors and account holders as the DOJ look into the bankruptcy case of FTX.

  • The U.S. Department of Justice (DOJ) has created a committee representing affected FTX customers.
  • Genesis, a crypto company with financial exposure to FTX, was also a member of the nine-member committee. 
  • Judge John Dorsey, who will preside over the case, urged the committee to consider creditors’ privacy concerns.
  • FTX argued that revealing customers’ identities could expose them to scams. 
  • Following FTX’s collapse, more than one million individuals and institutions lost about $9 billion.

In a recent development regarding the FTX crisis, the U.S. Department of Justice (DOJ) has set up a committee to represent affected customers.

As revealed on Dec. 15, the committee will represent junior creditors and account holders as the DOJ look into the bankruptcy case of FTX. 

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The nine-member committee consists of three individual creditors, crypto trader Wintermute Asia PTE, Coincident Capital International, Pulsar Global Ltd, Octopus Information Ltd, Wincent Investment Fund, and Genesis affiliate GGC International Ltd, a firm with financial exposure to FTX. 

The U.S. Bankruptcy Judge John Dorsey, who will preside over the case, urged the committee to consider privacy issues relating to creditors. However, FTX is advocating for the protection of users’ personal details. 

FTX argued that revealing the identity of its customers could expose them to scams and erode the business value of its existing customer list of potential buyers.

The bankruptcy hearing will take place in January 2023.

Investors Lost About $9 Billion in the FTX Crisis

On November 11, FTX filed for bankruptcy in Delaware following the massive outflow of users’ funds from the crypto exchange. The enormous exodus of about $6 billion emanated after Binance abandoned a takeover deal of the embattled crypto exchange. 

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Following the collapse of FTX, investors lost about $9 billion in a crisis that affected more than one million individual and institutional creditors. The DOJ is set to commence the bankruptcy proceedings of FTX following the arrest of its former CEO, Sam Bankman-Fried.

Bankman-Fried is facing numerous charges from the Department of Justice, the U.S. Securities and Exchange Commission, and the Commodities and Futures Trading Commission. 

Further, US Attorney Damian Williams confirmed that amid the ongoing investigations into the FTX collapse, more charges would come against other individuals involved in the incident. 

The new FTX CEO John Ray, during a hearing before the U.S. House Financial Services Committee, divulged that Bankman-Fried’s parents might have taken a part of his loot from customers’ funds. 

On the Flipside

  • According to reports, appointing Genesis affiliate firm to the committee is unlikely to ease Genesis’ liquidity concerns due to the FTX contagion.

Why You Should Care

The creditors’ committee comprises individual account holders, investment funds, and a Genesis affiliate. They will represent all unsecured creditors, often the last to receive payment in a bankruptcy proceeding.

 

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This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Soumen Datta

Soumen has been a dedicated researcher and writer in the field of cryptocurrencies for the last few years. Even though Indian crypto regulations are still unclear, he believes that India will continue to innovate in the years to come. He loves to play his guitar and sing along in his spare time. He holds bags mostly in BTC, ETH, BNB, MATIC, ADA.