FTX Doom Draws Dozens of Federal, State, International Agencies

Three-letter agencies are set to hone in on Sam Bankman-Fried’s collapsed FTX empire, which could have more than a million creditors

article-image

Blockworks exclusive art by Axel Rangel

share

Regulatory agencies around the world are in contact with FTX lawyers, who have said there could be anywhere from 100,000 to more than one million users affected by the exchange’s shock bankruptcy.

The firm’s flagship entity, FTX Trading Ltd, filed a motion with the US bankruptcy court in Delaware on Monday, seeking authority to contact its creditors via email.

Law firm Sullivan & Cromwell also requested relief from filing a list of the top 20 creditors for each of the 134 FTX affiliated entities which filed for Chapter 11 bankruptcy last Friday.

Instead, the motion asks the court to allow it to file a single, consolidated list detailing the top 50 creditors across all FTX companies by Friday.

“The Debtors [FTX] expect that the exercise of compiling separate creditor lists for each individual Debtor would consume an excessive amount of the Debtors’ limited time and resources at this critical time,” lawyers said.

The filing marks one of the first moves in what’s set to be a sprawling and landmark bankruptcy case for the crypto industry. 

“As set forth in the Debtors’ petitions, there are over [100,000] creditors in these Chapter 11 Cases. In fact, there could be more than one million creditors in these Chapter 11 Cases,” lawyers wrote.

FTX, led by founder Sam Bankman-Fried, was one of the largest crypto exchange brands in the world at the time of its collapse, handling billions in daily trade volume, second only to Binance.

Once valued at more than $32 billion, FTX suddenly collapsed last week. Its sister trading outfit Alameda Research, purportedly a totally separate firm, was revealed to be working with a precarious balance sheet heavily weighted toward the exchange’s native token FTT.

Binance CEO Changpeng Zhao, who had previously led his crypto exchange to invest in FTX, announced he’d soon be offloading his FTT stake to avoid outsized exposure. Markets reacted negatively, sending FTT down almost 90% and triggering a $6 billion bank run on FTX.

FTX users had rushed to withdraw their funds from the Bahamas-based platform, causing severe withdrawal bottlenecks. Around the same time, Zhao and Bankman-Fried floated a potential buyout deal to save FTX customers, which would’ve seen Binance absorb FTX.

The deal ultimately fell through, leading to FTX’s bankruptcy and countless customers out of pocket, including hedge funds and crypto projects.

Details of epic mismanagement at FTX later emerged — most glaringly the use of customer funds to make risky bets across the crypto ecosystem which amounted to a black hole of more than $8 billion. It’s a mess that must now be cleaned up by restructuring expert John Jay Ray III, who handled disgraced corporate giant Enron following its own bankruptcy.

“Immediately upon appointment, [Ray] began working with FTX’s external legal, turnaround, cybersecurity and forensic investigative advisors to secure customer and debtor assets around the world,” lawyers wrote.

Ray and his team stopped trading and withdrawal functionality on FTX and ordered the firm’s digital assets be moved to a new cold wallet custodian, a response to a hack involving nearly half a billion dollars in FTX assets over the weekend.

Bahamian authorities have already announced a criminal investigation into FTX and froze its local assets. FTX’s recent bankruptcy filing cited “substantial interest in these events among regulatory authorities around the world.”

FTX representatives have “been in contact over the past 72 hours with the U.S. Attorney’s Office, the U.S. Securities and Exchange Commission, the Commodity Futures Trading Commission, and dozens of Federal, state and international regulatory agencies,” the filing reads.

If that disclosure is anything to go by, this whole ordeal is just getting started.

H/T: Kadhim Shubber


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 24 - 26, 2026

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template (1).jpg

Research

As AI supercharges surveillance, privacy becomes a prerequisite and the winning stack will combine confidentiality with selective disclosure. Zcash’s Tachyon, composable standards on Ethereum/Solana, and compliance-aware pools aim to make private rails the new norm.

article-image

Pipe’s testnet has delivered 60+ PB of data across ~290,000 Point of Presence (PoP) nodes

article-image

375ai will hold TGE at the end of the month, CEO Harry Dewhirst told Blockworks

article-image

Block’s subsidiary adds direct Bitcoin integration and AI-powered ordering tools for small businesses seeking streamlined transactions

by Blockworks /
article-image

The deal integrates Dinero’s staking suite into Plume’s real-world asset platform as it gains SEC transfer agent status

by Blockworks /
article-image

The state’s decision opens staking access to New Yorkers, signaling a regulatory shift toward broader crypto participation

by Blockworks /
article-image

The startup says it aims to rival Stripe and Worldpay by using stablecoins to speed merchant settlements from days to seconds

by Blockworks /