On Tuesday, proceedings began in the United States Bankruptcy Court for the District of Delaware to decide the fate of FTX, formerly one of the largest cryptocurrency exchanges in the world.

At the hearing, James Bromley, a partner at Sullivan & Cromwell and co-head of the firm’s global restructuring practise, said, “We are here on an unprecedented matter and I don’t say those words lightly.” It is unusual for a case to have its first hearing more than a week after being filed. However, what we have here […] is an entirely new species.

According to Bromley, “a small group of inexperienced and unsophisticated individuals” were running FTX before it filed for bankruptcy. The evidence suggests that “some or all of them were compromised,” which is very bad news.

Before the end of the month, the cryptocurrency exchange had fallen from favour and, on November 11, had filed for Chapter 11 bankruptcy. Sam Bankman-Fried, founder and former CEO of FTX, stepped down at the time, and John J. Ray III, a veteran of the Enron turnaround, was brought in to take over. On Tuesday, Ray and over 1,100 other people attended the hearing together in person or via the Zoom meeting link and YouTube streaming.