In official bankruptcy filings made public on Tuesday, the defunct cryptocurrency exchange FTX described a “severe liquidity crisis,” as regulators launched investigations and demanded that rules for the stifled sector be implemented more quickly.
According to FTX’s filing with a U.S. bankruptcy court, it had appointed five new independent directors to each of its principal companies, including Alameda research, and was in contact with financial regulators.
Sam Bankman-Fried, the founder and former CEO of the exchange, claimed in a late-Monday report by the New York Times that he overgrew his company and missed warning signs of trouble at the exchange. The exchange’s demise sent shockwaves through the cryptocurrency industry.
FTX’s fall triggers French central bank to urge for regulation
Francois Villeroy de Galhau, governor of the French central bank, called for a global regulatory response to the financial uncertainty brought on by the cryptocurrency market in a speech in Tokyo.
“Let me stress that this uncertainty is why we need to regulate strongly and quickly crypto assets internationally.””The last episodes show us that we cannot allow for a second ‘crypto winter’ to still add to uncertainty and financial instability.”
After claiming on Saturday that it had discovered “unauthorized transactions” on its platform, FTX also acknowledged that it had responded to a cyberattack on November 11.
In one of the most publicized cryptocurrency meltdowns, it filed for bankruptcy protection on Friday after irrational traders decided to withdraw $6 billion from the exchange in just 72 hours, and direct competitor exchange Binance dropped a rescue plan.
FTX has appointed five independent directors to its various units, according to the filing from the company’s lawyers. Joseph Farnan, a former judge on the U.S. District Court, and Matthew Doheny will be in charge of FTX Trading.
Investigations by the U.S. Justice Department, the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission have been prompted by the collapse of FTX, once the sweetheart of the cryptocurrency industry with a $32 billion valuation as of January.
The fall of FTX has also triggered global regulators to push for quicker regulation to avoid such an event in the future.