MAS, PMO among government agencies on FTX creditor list, but are not creditors

FTX filed for Chapter 11 bankruptcy in November last year. PHOTO: REUTERS

SINGAPORE – Four Singapore government agencies which are not creditors of FTX have been included in a broad list of creditors of the collapsed cryptocurrency exchange, illustrating the difficulty of establishing a true picture of the tangled bankruptcy.

The Prime Minister’s Office (PMO), Ministry of Sustainability and the Environment (MSE), Monetary Authority of Singapore (MAS) and Intellectual Property Office of Singapore (Ipos) were among thousands of entities around the world listed in a verification of creditor matrix filed on Jan 25 by FTX’s new management in a US bankruptcy court in the state of Delaware.

After the 116-page document was published, screenshots of the pages with the ministries or agencies listed were circulated on WhatsApp.

But based on checks with the four Singapore government agencies, The Straits Times understands that they are not creditors nor do they owe any monies to FTX.

FTX’s lawyers declined to comment when contacted, but referred to a Jan 26 statement which said the list includes those who may appear in FTX’s books and records “for any number of reasons”, and that “inclusion of a name on the matrix does not necessarily indicate that the party is a creditor”.

Once the second-largest cryptocurrency exchange valued at about US$32 billion (S$42.5 billion), FTX filed for Chapter 11 bankruptcy in November last year after an article on the company’s financial structure spooked customers and sparked a reported $6 billion run on the exchange in 72 hours.

Under Chapter 11 bankruptcy, the firm is given time to restructure before it pays back its creditors.

After the crash, it emerged that FTX was made up of a web of more than 100 different companies. Court filings show that it expects to have more than one million individual creditors, with its 50 top creditors owed more than US$3.1 billion.

Over-inclusive list

The Jan 25 list contains thousands of entries, including an assortment of institutions, from banks to media companies, regulators and government agencies from around the world. The names of individuals are redacted.

Some 50 Singapore entities are in the list. Besides the PMO, MSE, MAS and Ipos, there are also law firms, office space providers, crypto-related companies and venture capital funds.

Lawyer Daniel Liu, from Wong Partnership’s restructuring and insolvency and special situations advisory practices, said financial regulators from various countries may appear on the list if FTX was operating in those countries. This could happen even if FTX is not licensed in those countries.

Swiss Financial Market Supervisory Authority, or Finma, is among regulators on the list. FTX is reported to have made a failed bid for a trading licence in Switzerland.

Such creditor lists tend to be over-inclusive as they are meant to notify any potential or possible creditor of developments in the case, including what they need to do to file claims, said lawyer Nawaz Kamil, who heads the insolvency practice at Providence Law Asia.

“Basically, if an entity appears in the books and records as a potential or possible creditor, they will include it,” he said, adding that the lists are subject to amendments and updates in the course of the case.

In the case of FTX, this could be problematic as its new leadership has said that there was almost no record-keeping at the company.

FTX’s new chief executive officer, Mr John Ray, who was brought in to take over from FTX founder and former chief executive officer Sam Bankman-Fried, has described FTX’s collapse as one of the biggest business failures he has seen, calling it a “paperless bankruptcy” with a “complete absence of trustworthy financial information”.

This explains why the creditor matrix will include those who are likely not creditors, since the list derives entirely from information supplied by FTX management and information found in its books and records, said Professor Adrian Walters from the Illinois Institute of Technology Chicago-Kent College of Law, an expert in cross-border insolvencies.

“My hunch is that the big concern is that there is no way of telling from what information FTX is holding who is a creditor and who is not. And so wherever there is a reference to anyone in what internal information and records are held, they are being added to the list out of an abundance of caution,” he added.

“The FTX management and lawyers are to some considerable extent flying blind, and so there is an element of them having to cover all their bases.”

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