Stunning Downfall: Crypto Giant FTX Files For Bankruptcy

Crypto giant FTX has filed for bankruptcy after suffering a stunning downfall from grace.

Eko Hot Blog reports that cryptocurrency exchange FTX has filed for Chapter 11 bankruptcy in the United States (US).

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The company made the disclosure in a statement posted on Twitter on Friday.

Press Release pic.twitter.com/rgxq3QSBqm

— FTX (@FTX_Official) November 11, 2022

According to the statement, John J. Ray III has succeeded the firm’s founder, Sam Bankman-Fried, as CEO.

FTX’s implosion followed the decision to lend billions of dollars’ worth of customer assets to fund risky bets by Alameda, the Wall Street Journal reported on Thursday. Alameda now owes FTX a staggering $10 billion that the exchange had serious trouble raising, according to the American newspaper.

In a Twitter thread on Friday, the 30-year-old founder apologised for the company’s downfall.

“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.”

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

Earlier on Thursday, he admitted that he “f—ed up.”

FTX founder, Sam Bankman-Fried

FTX said Bankman-Fried will remain CEO temporarily to assist in an orderly transition.

Approximately 130 additional affiliated companies are part of the bankruptcy proceedings, including Alameda Research, Bankman-Fried’s crypto trading firm, and FTX.us, the company’s U.S. subsidiary.

In the 23-page bankruptcy filing, 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.

“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,” the new FTX chief, Ray, said.

“The FTX Group has valuable assets that can only be effectively administered in an organized, joint process. I want to ensure every employee, customer, creditor, contract party, stockholder, investor, governmental authority and other stakeholder that we are going to conduct this effort with diligence, thoroughness and transparency.”

He added that stakeholders should understand that events have been fast moving, that the new team is engaged only recently and that they should review the materials filed on the docket of the proceedings over the coming days for more information.

The move caps off a tumultuous week for one of the biggest names in the crypto sector.

In the space of days, FTX went from a $32 billion valuation to bankruptcy as liquidity dried up.

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Customers demanded withdrawals and rival exchange Binance ripped up its nonbinding agreement to buy the company.

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