FTX, a beleaguered cryptocurrency exchange, announced on Friday that it had filed for bankruptcy and that Sam Bankman-Fried, its CEO, had resigned. This news comes just days after Bankman-Fried revealed a devastating financial crisis that has begun to destabilise the larger digital currency market.
In the United States, FTX filed for Chapter 11 bankruptcy, which means it will attempt to restructure its failing company. Customers’ withdrawals from the business, which was once among the biggest cryptocurrency trading platforms in the world, were stopped earlier this week after an exchange run was sparked by signs of possible financial instability.
According to a press release from the organization’s new CEO, John Ray III, “the immediate relief of Chapter 11 is appropriate to give the FTX Group the opportunity to assess its situation and develop a process to maximise recoveries for stakeholders.”
The bankruptcy filing was ready to deal another blow to the collapsing cryptocurrency market and further damage the reputation of the sector in Washington, where FTX and political megadonor Bankman-Fried recently led an effort to influence new laws and regulations. The trading scandal has drawn the attention of regulatory bodies from all over the world, who are now investigating FTX and Bankman-Fried. FTX-affiliated cryptocurrency firms have also experienced business interruptions.
According to the bankruptcy filing, the assets and liabilities of Bahamas-based FTX and its more than 130 affiliates and subsidiaries, which includes Bankman-Fried’s investment company Alameda Research, range from $10 billion to $50 billion. Customers are probably among the company’s more than 100,000 creditors, who have been informed that money will be made available to them.
According to FTX, Bankman-Fried will “help in an orderly transition.” This week, the 30-year-old former billionaire’s wealth was completely destroyed.
Ray, who was also involved in closing down Enron, stated that “The FTX Group has valuable assets that can only be effectively administered in an organized, joint process.” We will conduct this effort with diligence, thoroughness, and transparency, I want to assure every employee, customer, creditor, contract party, stockholder, investor, governmental authority, and other stakeholder.
Only a few hours after the Securities Commission of the Bahamas, where FTX is based, announced it was freezing the company’s assets, the company is seeking Chapter 11 protection in a federal court in Delaware.
After the bankruptcy petition was submitted, Bankman-Fried posted on Twitter, “I’m really sorry, again, that we ended up here.” “I hope there is a way for things to turn around. Hopefully, this will help them have a little more transparency, trust, and governance.
One of the organisations looking for bankruptcy protection is FTX’s U.S. operation, which Bankman-Fried claimed Thursday had not been “financially impacted by this shitshow.” At the company’s U.S. operation, “there aren’t many people left,” according to a source with knowledge of the situation.
One key entity whose assets are not included in the sprawling company’s bankruptcy filing is its U.S. derivatives trading platform, which has reverted to the LedgerX name it carried before it was acquired by FTX last fall.
Officials at the Commodity Futures Trading Commission, where LedgerX has a license, had been monitoring the chaos surrounding Bankman-Fried over fears the Bahamas-based exchange’s problems could affect regulated markets in the U.S.
An inquiry for comment from FTX was not answered.
