The bankruptcy proceedings include FTX US as well as FTX’s crypto hedge fund Alameda and about 130 other sister companies.
The CEO of the company, Sam Bankman-Fried, the 30-year-old founder of the exchange, who until recently was called "the next Warren Buffett," resigned from his position and lost 94% of his personal fortune.
“I’m really sorry, again, that we ended up here,” Bankman-Fried wrote in a Twitter thread Friday. “Hopefully things can find a way to recover.”
In the span of just a few days, FTX went from a $32 billion valuation to bankruptcy as liquidity dried up, customers demanded withdrawals and Binance, its biggest competitor in cryptocurrency trading, ripped up its nonbinding agreement to buy the company. Fried admitted on Thursday that he “fucked up.”
2) I'm really sorry, again, that we ended up here.Hopefully things can find a way to recover. Hopefully this can bring some amount of transparency, trust, and governance to them.Ultimately hopefully it can be better for customers.— SBF (@SBF_FTX) November 11, 2022
In the 23-page bankruptcy filing, according to CNBC, FTX indicates it has more than 100,000 creditors, assets in the range of $10 billion to $50 billion, as well as liabilities in the range of $10 billion to $50 billion.
“Everyone’s a little bit in shock,” said Shan Jun Fok, co-founder of Moonvault Partners, a crypto investment firm based in Hong Kong. “A lot of people trusted FTX as the gold standard.”
“Everyone’s a little bit in shock, a lot of people trusted FTX as the gold standard.”Shan Jun Fok, co-founder of Moonvault Partners
Securities regulators in the Bahamas, where FTX is based, froze some of the embattled exchange’s assets on Thursday. Both the Justice Department and Securities and Exchange Commission are investigating FTX, according to The Wall Street Journal.
FXT bankruptcy signals of difficult weeks for crypto market
The firm appointed a new CEO, John Ray III, with Fried remaining to assist in an orderly transition of positions, many employees are expected to stay on to operate the company, according to CNN. Fried also indicated he wishes to appoint Stephen Neal as the firm’s new chairman of the board.
“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, the new FTX chief, told CNBC.
Economists estimate that difficult weeks await the rest of the cryptocurrencies and trading exchanges. The collapse of a large company, with no visible red flags, makes investing in currencies particularly dangerous - at a time when there is already a lot of skepticism among investors regarding the stability of the crypto market.