FTX Bankruptcy: 'No Amounts' to SBF or His Inner Circle

Delfrina Yasmine . November 22, 2022

Picture: FTX and Alameda Research

Techspace - Former FTX CEO Sam Bankman-Fried was correct about one thing: he and his inner circle will not get any more money from the firm.

FTX stated in a court statement over the weekend that neither Bankman-Fried nor the three recently sacked members of his inner circle (or their family members) will get compensation from the now-bankrupt corporation.

Making users whole is the most important thing, as Bankman-Fried stated on November 10, the day before FTX filed for bankruptcy and he resigned as CEO. He said this the day before FTX announced its plans to close its doors. On Twitter, he stated, "After that, investors both old and new, and employees who have battled for what's right in their career, and who wasn't culpable for any of the fuckups."

He was still serving as CEO during that period, and the news that the firm would be filing for bankruptcy still needed to be made public.

Since then, FTX has been working to disassociate itself further and more from Bankman-Fried. On November 11, the corporation filed for protection under Chapter 11 of the United States Code, Bahamian regulators initially denied and admitted that they had directed workers to engage in illicit transactions involving hundreds of millions of dollars of cash.

"No monies will be paid under the power requested by this motion to any of the following people or any person known by the debtors to have a family link to any of Samuel Bankman-Fried, Gary Wang, Nishad Singh, or Caroline Ellison," the business says in today's filing.

Picture: FTX bankruptcy court docket

According to a Wall Street Journal story, FTX co-founder and chief technology officer Gary Wang, engineering director Nishad Singh, and Alameda Research CEO Caroline Ellison were sacked on Friday, November 18.

The explicit exclusion of Bankman-Fried and his inner circle emerged in an FTX request to pay employees what they were entitled to for work done before the business filed for bankruptcy and continue providing wages and benefits during the court proceedings.

Read Also: The New Head of FTX Blames The Failure of The Crypto Exchange

In bankruptcy proceedings, it is typical for the debtors, in this case, FTX, to ask the judge for permission to continue paying its employees. After all, the finances of the corporation are intended to be frozen. However, the current FTX CEO, John J. Ray III, has stated that locating all of FTX's finances and workers have been exceptionally challenging.

The court filing also revealed that the business had logged $20,000 in billable hours with Owl Hill Advisory, the firm through which it hired John J. Ray III as its new CEO, before declaring for bankruptcy.

Ray charges FTX a flat rate of $1,300 per hour, which will be billed to the company monthly by the advising firm. The executives he will recruit from RLKS Executive Solution to assist him with the administration and finances will get $975 per hour.

FTX also stated in the filing that the company had discontinued compensating certain workers "using their cryptocurrency token and stock options or equity-based remuneration." The FTX Token, often known as FTT, is the company's unique token.

The first sign of trouble for FTX and its sister business, the quantitative trading desk Alameda Research, came when it was discovered, through the leaking of a balance sheet, that the $14 billion balance sheet of Alameda contained the $5 billion worth of FTT. This prompted Binance, a prior investor in FTX, to announce that it would sell down its 580 million dollar holding in FTT. As a direct consequence of the ensuing bank run, the price of FTT plummeted as users scrambled to liquidate their tokens and remove cash from the FTX platform.

Binance retracted its intention to purchase FTX, a competing cryptocurrency exchange, one day after it announced its intention. Then, Bankman-Fried stated in several lengthy Twitter threads that he had misunderstood the company's leverage and that he and his team would be working to find liquidity, announcing at one point that there was a pending deal with Justin Sun's TronDAO. This occurred after Bankman-Fried had previously said he had misunderstood the company's leverage.

But on Friday, November 11, just a few short hours after making that declaration, FTX submitted its application for protection under Chapter 11 of the bankruptcy code

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