FTX Files for Chapter 11 Bankruptcy
- FTX filed for Chapter 11 bankruptcy, joining the likes of Voyager as notable failures.
- Sam Bankman-Fried has also resigned as CEO but will stay on to help the new team.
- Legislators have called for tougher sanctions against cryptocurrency firms after it has become common for projects to fail, wiping out users’ funds.
The FTX drama has taken a new twist as the exchange’s CEO, Sam Bankman-Fried, announced that he had filed for Chapter 11 bankruptcy in the District of Delaware. This news comes a few days after a proposed takeover plan with Binance failed to go through.
In a statement shared on Twitter, Bankman-Fried also announced that he will be stepping down from his role as CEO and will be replaced by John J. Ray III. However, the statement noted that SBF would stay on to aid a smooth transition.
A total of 130 additional connected companies are involved in the proceedings, including FTX.us, the corporation’s U.S. subsidiary, and Alameda Research, Bankman-Fried’s cryptocurrency trading company. FTX lists more than 100,000 creditors and assets between $10 billion and $50 billion. It also listed liabilities between $10 billion and $50 billion. Bankman-Fried also stated that he intends to name Stephen Neal as the company’s new chairman of the board.
The new FTX chief, Ray, said the chapter 11 filing offered immediate relief and was “appropriate to provide the FTX Group the opportunity to assess its situation and develop a process to maximize recoveries for stakeholders.”
Ray said in his statement,
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.
Press Release pic.twitter.com/rgxq3QSBqm— FTX (@FTX_Official) November 11, 2022
Ray called for stakeholders to understand that things have moved quickly and that the new team has only recently begun working on the case. Crypto users have found it shocking that FTX, with a valuation of around $32 billion, declined to file for bankruptcy. According to reports, FTX Australia Pty Ltd., FTX Express Pay Ltd., LedgerX LLC, and FTX Digital Markets Ltd. are not included in the Chapter 11 proceedings.
The demise of a significant cryptocurrency trading platform like FTX is the most recent bankruptcy filing in 2022, following that of Voyager Digital and Celsius. Lawmakers worldwide have proposed tougher regulations for crypto businesses in response to the issue involving FTX and others.
Meanwhile, Bankman-Fried has remained active on social media, taking responsibility for the sad turn of events. Reemphasizing his previous apology, the crypto developer wrote,
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 said he will be working to provide “clarity” on user recovery as soon as possible, adding, “This doesn’t necessarily have to mean the end for the companies or their ability to provide value and funds to their customers chiefly.”