Embattled Crypto Exchange FTX Files for Bankruptcy in US
By Adedapo Adesanya
FTX will file bankruptcy proceedings in the United States while Mr Sam Bankman-Fried, the Chief Executive Officer (CEO), has resigned, the embattled crypto exchange said on Friday.
The announcements, made on the company’s Twitter handle, come days after larger rival, Binance, walked away from a proposed acquisition and left it scrambling to raise about $9.4 billion from investors and rivals.
Also, Mr Bankman-Fried’s trading firm, Alameda Research, is also part of the bankruptcy protection, the company said.
“FTX Trading Ltd. (d.b.a. FTX.com), announced today that it, West Realm Shires Services Inc. (d.b.a. FTX US), Alameda Research Ltd. and approximately 130 additional affiliated companies (together, the “FTX Group”), have commenced voluntary proceedings under Chapter 11 of the United States Bankruptcy Code in the District of Delaware in order to begin an orderly process to review and monetize assets for the benefit of all global stakeholders,” the statement read.
Mr John J. Ray III has been appointed Chief Executive Officer of the FTX Group following Bankman-Fried’s resignation from his role as CEO and will remain to assist in an orderly transition.
Many employees of the FTX Group in various countries are expected to continue with the FTX Group and assist Mr Ray and independent professionals in its operations during the Chapter 11 proceedings.
“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,” said Mr Ray.
“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 stakeholders that we are going to conduct this effort with diligence, thoroughness and transparency.
“Stakeholders should understand that events have been fast-moving and the new team is engaged only recently. Stakeholders should review the materials filed on the docket of the proceedings over the coming days for more information.”
FTX was seeking a lifeline after a liquidity crunch due to customers withdrawing funds at a frenetic pace. It also fans concerns about the future of the crypto industry, which faces an uphill task of regaining favour among retail investors.