FTX Files for Bankruptcy While Sam Bankman-Fried Steps Down as CEO
According to a tweet from the company, Sam Bankman- Fried’s FTX cryptocurrency exchange has filed for Chapter 11 bankruptcy in the U.S. Bankman-Fried has also resigned as CEO and will assist John J. Ray III with his new role for the exchange.
The voluntary proceedings involve Alameda Research, Bankman-Fried’s cryptocurrency trading firm, and over 130 other affiliated businesses.
The new FTX CEO Ray stated that “the immediate relief of Chapter 11 is appropriate to provide the FTX Group the opportunity to assess its situation and develop a process to maximize recoveries for stakeholders.”
Ray continued to explain that the FTX Group has “valuable assets” that can only be managed profitably through a planned and collaborative process. He wants to reassure every employee, customer, creditor, contract party, stockholder, investor, governmental authority, and others involved, that the company aims to handle this effort with “diligence, thoroughness and transparency.”
He added that stakeholders should be aware that recent developments have moved quickly and the new FTX team has only recently begun working on the case. Ray recommended that they should review the documents filed on the docket of proceedings in the upcoming days for more information.
For one of the largest names in the industry, these events bring an end to a turbulent week.
As liquidity dried up for the exchange, users requested withdrawals, and rival exchange Binance tore up its non-binding agreement to buy the company. FTX then plummeted from a $32 billion valuation to bankruptcy in a matter of days. Bankman-Fried said on Thursday that he “f***ed up.”
The founder of SkyBridge Capital and former head of Trump’s communications, Anthony Scaramucci, traveled to the Bahamas this week to assist Bankman-Fried as an investor and friend. He claims that when he arrived, it was too advanced for a straightforward liquidity rescue. When he and other investors initially assessed FTX as a potential business partner, he said there was no proof of mismanagement.
“Duped I guess is the right word, but I am very disappointed because I do like Sam,” Scaramucci said on Friday morning. “I don’t know what happened because I was not an insider at FTX.”
LedgerX LLC, FTX Digital Markets Ltd., FTX Australia Pty Ltd., and FTX Express Pay Ltd. are not included in the Chapter 11 proceedings.