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FTX Started Bankruptcy Proceedings Today, First Hearing With US Senate in December

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The fall of Sam Bankman-Fried’s crypto empire FTX has attracted the attention of United States authorities as they seek to uncover the truth behind the company’s sudden collapse.

While the U.S. House Committee on Financial Services is still preparing its case against the fallen exchange and its broader consequences for the emerging economy, the Senate Committee on Agriculture, Nutrition and Forestry has scheduled its first hearing with FTX for Thursday, December 1st.

Lesson Learned From FTX Collapse

The hearing titled, WHY CONGRESS NEEDS TO ACT: LESSONS LEARNED FROM THE FTX COLLAPSE, will begin at 10 a.m. (EST) at the Senate’s Office Building with Rostin Behnam, Chairman of the Commodity Futures Trading Commission (CFTC), as one of the witnesses.

The hearing will explore and discuss all the events that led to the liquidity crisis and FTX’s subsequent implosion, which forced the firm into bankruptcy on November 11.

Given the series of negative events in the crypto industry, starting with Terra (LUNA) in May and now FTX, the outcome of the hearing will presumably lay a new foundation for stricter regulations for crypto entities that will help eradicate bad actors from exploiting the new economy.

Authorities from other countries, such as Turkey and the Bahamas, have already launched investigations into the exchange. However, the decision from the United States could serve as a bedrock for other nations to follow in regulating the nascent industry.

Earlier this month, Congress stated that the FTX fiasco would help the authorities improve on its incoming legislation dubbed “the Digital Commodities Consumer Protection Act of 2022” to ensure that it covers all loopholes regarding regulation.

FTX Bankruptcy Hearing Began Today

While the Senate’s hearing is slated for next month, the exchange started its bankruptcy proceedings today at the Delaware Court.

The bankruptcy filing revealed that FTX owes its 50 biggest unsecured creditors around $3.1 billion.

However, a recent court filing by the new FTX restructuring group Alvarez & Marsal North America LLC (A&M) revealed an additional cash balance from the previous records.

The latest discovery represents an overall balance of $1.24 billion, with the most considerable sums, $393.1 million and $303.4 million from its subsidiaries, trading company Alameda Research and crypto derivatives firm LedgerX.

Although the new funds surpassed the previous balance recorded by the debtors, FTX still owes its creditors billions of dollars.

~ By William A. Frederick ~


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