Committee to represent creditors formed in FTX bankruptcy case

A committee to represent unsecured creditors and serve as the voice for most FTX customers in court was established in the U.S. bankruptcy case of FTX and its affiliated companies.

The formation of the committee, meant to represent anyone who had money in FTX or affiliated companies but was not given collateral for what FTX owes them, will allow the bankruptcy proceedings to move forward. Representatives for the U.S. Trustee, an office within the Justice Department that represents the U.S. government in bankruptcy proceedings and helps formalize such committees, said earlier this week that forming this one had been difficult due to the highly international nature of FTX’s customer base.

While U.S. government lawyers have pushed for more transparency in identifying large businesses that FTX owes money to, the collapsed exchange, under its new leadership, has argued to keep that information under seal on the grounds that its client list is a valuable company asset that could be sold to help recoup money. The formation of a creditor committee will allow the matter to move to a conclusion, as the judge presiding over the case had wanted to wait until the committee was formed and able to express its view before making a decision on the matter.

Friction also remains over the fate of the Bahamas arm of FTX’s group of companies, FTX Digital Markets. Former FTX CEO Sam Bankman-Fried put that part of his corporate empire into a separate bankruptcy process, with a different group of lawyers charged with liquidating the company. Lawyers representing the rest of the corporate family, now headed by corporate bankruptcy and restructuring expert John Ray III, have claimed that movement of hundreds of millions of dollars-worth of assets out of accounts controlled by that subsidiary violated U.S. bankruptcy law.

Members of the unsecured creditor committee include:

• Zachary Bruch, an individual investor with New York-based representation.
• Coincident Capital International, Ltd., a cryptocurrency hedge fund whose corporate LinkedIn profile places them in the Cayman Islands.
• GGC International Ltd., a Bermuda-based firm.
• Octopus Information Ltd., a British Virgin Islands-based firm.
• Pulsar Global Ltd., a Hong Kong-based crypto trading firm and market maker.
• Larry Qian, an individual investor.
• Acaena Amoros Romero, an individual investor.
• Wincent Investment Fund PCC Ltd., a Gibraltar-based investment fund.
• And Wintermute Asia PTE. Ltd., an algorithmic trading firm that appears to have multinational operations but is identified in court documents as Manchester, UK-based.

Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from founder and former FTX and Alameda CEO Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions.

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