Business

FTX’s bankruptcy hearing: the highlights

So much for winning a “judicial battle against the state of Delaware.”

FTX lawyers agreed this week that Bermuda’s bankruptcy will be heard in Delaware, not in New York where it was originally filed. In other words, the turf war ended in a truce.

Unfortunately, Delaware is also a notorious haven for corporate secrets. One counterargument to criticism of the Blue Hen State is that the US Department of Justice has direct access within its borders, unlike, say, the Bahamas or the Cayman Islands.

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But for now, the court has sided with FTX representatives over the US Department of Justice trustee and will keep the largest cryptocurrency exchange’s creditors anonymous. The non-disclosure will continue at least until the evidentiary hearing on December 16th – and the list could remain permanently revised. FTX’s arguments for anonymity deserve a separate post, but for now we’ll raise eyebrows.

so what she did We knew, besides moving the New York/Bahamas issue to Delaware? First, we learned that Delaware isn’t necessarily prepared for hundreds of Zoom participants, many of whom are heavily online. Officials relied on the honor system to prevent callers from turning on their cameras and microphones, which meant the only 10-minute court break came with two men asking for their money back and at least one repeating his voice to stream music. When a participant was asked to pull, he asked who the “boomer” was.

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We also learned that the new CEO and the team consider some former employees “at risk.” It’s not yet clear what they mean by this, but we feel like we’ll find out!

The team (and its new board of directors) also wants to sell some of the FTX-controlled businesses as quickly as possible. “We believe, Your Honor, that we will be very quickly ahead of you by trying to sell some companies that we understand, at least today, to be self-sufficient and strong and have generated interest from others in the market,” said James Bromley, a Sullivan and Cromwell attorney representing the new management of FTX.

We also learn that Sam Bankman-Fried has consulted not only with his father, a Stanford Law School professor, but also with his father’s colleague David Mills, who “teaches classes at Criminal law And the Business crime. ”

Other facts about FTX’s client base, cash reserves, and headcount came out, with some helpful charts to boot:

1) customer sites

Excluding traditional tax havens, the UK is tied to China for the largest share of FTX clients. The Cayman Islands and the Virgin Islands have higher percentages of customers, but given their tax haven status, who knows where the eventual owners of these accounts spend their time.

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Congratulations to London, you have outdone Singapore!

2) Staff

We also learned that there were “approximately 260” employees who left the company, James Bromley of Sullivan & Cromwell told the judge.

Below you can find FTX employee locations as of the end of October. The Corporations Debtor chart, on the left, includes the number of corporations filing for Chapter 11. The pie chart on the right includes those corporations, as well as subsidiaries in Australia and the Bahamas.

3) investments

We also have a selection of FTX-backed companies. Sequoia is on the list, our Financial Times colleagues reported, along with a group of artificial intelligence research firms, IEX, and. . . Storybook Brawl video game developer? (For a list of investors, please check tombstoNFT.)

4) Liquidity

Finally, we have a nice little summary of the criticism the new management team has managed to track down so far:

Alameda has the largest cash reserves by far, because fiat is required to make the markets go down YOLOing to dogecoin. Note that these amounts do not reflect any costs other than those deemed absolutely necessary for the company to continue operating for the next five weeks. Everything else has been stopped by bankruptcy.

Find full exhibits on the PACER website or here.

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