What the FTX creditor matrix does — and doesn’t — tell us about the exchange’s bankruptcy

FTX filed a massive matrix of creditors in bankruptcy court this week, naming law firms, fine dining restaurants, media outlets, and state government agencies as creditors that troubled crypto exchanges may owe money.

But a 115-page creditors matrix doesn’t tell the whole story.

Not every entity on the procedural documents is a confirmed FTX creditor, lawyers said. Millions of customer names remain confidential.

“Inclusion of a name on the matrix does not necessarily indicate that the party is a creditor of one of the debtors,” lawyers for FTX wrote in a court filing on Friday. “This matrix is ​​intended to be very broad for service purposes and includes parties who may appear in the debtor’s books and records for a number of reasons.”

In other words, the new FTX matrix of creditors serves as a large pool of addresses that courts can use to send future notices.

“It is a purely ministerial document that all debtors in all bankruptcy cases must prepare and submit to the courts and offices of the United States Trustees,” said Joseph Moldovan, partner at the law firm Morrison Cohen.

Wide net

Attorneys who compile this type of list of creditors usually list each entity on the company’s debt register, its investors and “any government agency that might have an interest in the case,” Moldovan said.

Complicating matters, new FTX CEO John Ray III said the exchange does not keep reliable business records, making the process of pooling FTX financial transactions more difficult.

Government agencies may be listed in the matrix for a number of reasons. FTX may owe taxes in certain jurisdictions, or the crypto giant may have paid remote employees in certain states.

FTX filed for bankruptcy protection in November, and its former CEO, Sam Bankman-Fried, is facing criminal fraud charges in a separate case.

FTX’s list of possible creditors ranges from the Alaska Department of Revenue and the Colorado Secretary of State’s office to the exclusive Carbone restaurant location in Miami Beach. The matrix lists a number of law firms and lobbies, including the Buckley law firm and the government affairs firm Rich Feuer Anderson.

Media outlets including CoinDesk and The Wall Street Journal also appear in the matrix, which may be due to subscriptions the company has or advertising deals.

“The list only provides names and addresses and doesn’t really tell us the types of claims or the number of claims that listed creditors may have,” said Stephanie Assi, an attorney at Carrington Coleman in Dallas whose practice includes bankruptcy and digital assets.

The creditors matrix shows the broad network of crypto-related companies that can make claims in the FTX bankruptcy case, including Kraken Ventures, Binance Capital Management, Coinbase Global, and the now-bankrupt Genesis, BlockFi, and Voyager. Venture capital firm Sequoia Capital, which says it lost $150 million in FTX, appears on the list, as do investment firms. Willoughby Capital.

Dozens of banks are listed in the creditor matrix, including Wells Fargo, Central Bank of Dubai, Bank of Cyprus, Central Bank of the Bahamas, BCB Bank, Deutsche Bank AG, HSBC Bank, and Royal Bank of Canada.

Tampa Bay Buccaneers quarterback Tom Brady and former Boston Red Sox designated hitter David Ortiz — who has been the target of separate class action lawsuits regarding FTX — are named in the new filing. The matrix also includes luxury hotels, food delivery services and streaming platforms. The Coachella music festival, Blue Bottle Coffee, Airbnb, Uber Eats, Netflix, Doordash, Nobu Hotel and W Miami hotel appear on the list, as do several resorts in the Bahamas including the Margaritaville Resort.

“We knew that they were living a good life, so there was Nobu and Coachella,” said Jeffrey Blockinger, general counsel at the Web3 firm Quadrata, Inc. “We know that they have deals with celebrities.”

We don’t know the names

Although the matrix of creditors offers a glimpse into the various companies and individuals who may file claims in a bankruptcy case, FTX’s millions of customers are still unknown to the public.

“What will end up being a more interesting basket is the actual people who have accounts at FTX,” said Blockinger. “Those are all redacted names.”

Nearly 9.7 million FTX customer names were redacted in the case, according to court documents. A Delaware bankruptcy court judge ruled earlier in January that the names would remain removed for another three months, despite objections from the US Trustees that oversee bankruptcy and a group of news organizations. Judge John Dorsey is expected to reconsider the editorial issue in a court hearing sometime in March.

Even the names of some of FTX’s main creditors were still being redacted, said Assi.

“Given the circumstances that led to FTX’s bankruptcy filing, information normally gathered previously is being investigated and uncovered as the bankruptcy comes to light. We can look forward to learning more in the coming months as John Ray and his team continue this process,” said Assi.

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

© 2023 Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.