FTX Files for US Bankruptcy, Sam Bankman-Fried Steps Down as CEO

On Friday, crypto exchange FTX filed for bankruptcy proceedings in the United States and Sam Bankman-Fried resigned as CEO, after a rapid liquidity crisis within the cryptocurrency group caused the intervention of regulators around the world.

The beleaguered crypto trading platform was struggling to raise billions to avoid collapse after traders rushed to withdraw $6 billion (nearly Rs 48,320 crore) from the platform. formed in just 72 hours and rival exchange Binance dropped a proposed bailout deal.

The company said in a statement shared on Twitter on Friday that FTX, its affiliate crypto trading fund Alameda Research and about 130 other companies have begun voluntary Chapter 11 bankruptcy proceedings in Delaware.

John J Ray III has been named to succeed as CEO of Bankman-Fried, the statement said.

“I’m so sorry, again, that we ended up here,” FTX founder Bankman-Fried said in a series of tweets after the bankruptcy filing began.

In his tweets, Bankman-Fried said the bankruptcy filing “doesn’t necessarily mean the end of the companies” and that he was “optimistic” the group’s new CEO would “help deliver what’s best”.

In its bankruptcy filing, FTX Trading said it had $10 billion (nearly Rs. 80,530 crore) to $50 billion (nearly Rs. 4,02,660 crore) in assets, $10 (almost 800 rupees) to $50 billion in liabilities, and more. more than 100,000 creditors.

The week’s turmoil hit already struggling cryptocurrency markets, sending bitcoin to its lowest level in two years.

FTX was struggling to raise about $9.4 billion (almost 75,740 crore rupees) from investors and rivals, Reuters reported citing sources, as the exchange sought to bail out after client withdrawals .

“Filing Chapter 11 is a necessary step to allow the company to assess the situation and develop plans moving forward for the benefit of stakeholders,” Ray said in a Slack memo to the FTX staff as seen by Reuters.

“I realize the recent news of the situation has been troubling and stressful, but I also know that filing for bankruptcy will be the start of a path forward.”

Some investors, including Sequoia and SoftBank, had already marked FTX investments to zero. SkyBridge Capital is working to buy out its stake in FTX, alternative investment firm founder Anthony Scaramucci said in an interview with CNBC on Friday.

Regulatory monitoring

These events mark a rapid turnaround for Bankman-Fried, the 30-year-old crypto executive, whose wealth was estimated by Forbes at around $17 billion (almost Rs. 1,36,850 crore) just two months ago. .

Bitcoin fell after FTX’s announcement, down 3.9% on the day to $16,816 (almost Rs. 13 lakh) at 1603 GMT (21:33 IST).

Shares of cryptocurrency and blockchain-related companies also fell on the news.

FTX’s FTT token plunged 30% on Friday, facing a weekly loss of 88%.

As FTX’s troubles mounted, regulators around the world stepped in.

FTX is under investigation by the Securities and Exchange Commission, the Department of Justice and the U.S. Commodity Futures Trading Commission, according to a source familiar with the investigations.

The Cyprus Securities and Exchange Commission has asked FTX EU to suspend operations on November 9, the regulator announced on Friday.

Bankman-Fried did not respond to requests for comment from Reuters.

“Once Binance backed off from buying FTX after just 24 hours of due diligence, the writing was on the wall for FTX,” said Antoni Trenchev, co-founder of crypto lender Nexo.

“We are now entering the next phase of the fallout, where we are witnessing second-order effects and finding out which entities were exposed to FTX and Alameda.”

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