FTX receives an official creditors’ panel in its bankruptcy case

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By Dietrich Knauth

Dec 15, 2017 (Reuters) – The U.S. Department of Justice’s bankruptcy watchdog appointed a committee Thursday to represent FTX accountholders as well as other junior creditors in the bankruptcy case of the crypto exchange that collapsed.

This committee, which is made up of investment funds and individual account holders as well as an affiliate of U.S.-based crypto firm Genesis, will represent all unsecured creditors. They are the ones who receive the least in bankruptcy.

The nine-member committee comprises three creditors: Genesis affiliate GGC International Ltd, cryptocurrency trader Wintermute Asia PTE and Coincident Capital International. It also includes Pulsar Global Ltd. Octopus Information Ltd., Wincent Investment Fund.

FTX filed in Delaware for bankruptcy protection after $6 billion was withdrawn by traders from the platform within three days. Binance, a rival exchange, abandoned a rescue agreement. A total of 1 million creditors have suffered losses in the event of the collapse, which has resulted in billions of dollar.

Voyager Digital and Celsius Network were two of the crypto companies that went bankrupt this year. Most of their customers, especially those who have interest-bearing accounts in cryptocurrency, were classified as unsecured creditors.

Unsecured debts such as medical bills or credit cards do not give lenders specific collateral rights. Lenders may claim collateral as security for secured debt, such a mortgage, car loan or other type of debt.

U.S. Bankruptcy Judge John Dorsey is currently overseeing FTX’s Chapter 11 case and stated during a Wednesday court hearing he expected the creditors’ committee will weigh in on customer privacy issues at a hearing in January.

FTX argued customer names should remain secret in order to prevent scammers from targeting them and preserve the business worth of FTX’s customer base for potential buyers.

In most bankruptcy cases, creditor names, contact information and the amount they owe are public information. The Justice Department and a number of media organizations tried to stop FTX from going too far in breaking with bankruptcy’s transparency requirements. (Reporting and editing by Alexia Garamfalvi, Deepa Babington).

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