FTX Group has filed for Chapter 11 bankruptcy protection under the U.S. Bankruptcy Code. Sam Bankman-Fried has stepped down as CEO.
Press Release pic.twitter.com/rgxq3QSBqm
— FTX (@FTX_Official) November 11, 2022
John Ray III has been appointed as CEO.
In addition to FTX Trading Ltd., the case involves about 130 affiliated entities, including Alameda Research.
According to the press release, the filing does not include LedgerX LLC, FTX Digital Markets Ltd., FTX Australia Pty Ltd. and FTX Express Pay Ltd.
“Filing under Chapter 11 is appropriate to give FTX Group the opportunity to assess its situation and develop a process for maximum restitution,” said John Ray III.
According to him, the FTX Group ‘possesses valuable assets that can be effectively managed only within an organised joint process’.
“I want to assure every employee, client, creditor, counterparty, shareholder, investor, government agency and other interested parties that we will undertake this work with diligence, thoroughness and transparency,” the CEO added.
According to filing of Alameda Research, it has more than 100,000 creditors. The company\’s assets and liabilities are estimated at between $10 billion and $50 billion.
Bankman-Fried expressed regret and hoped the decision would be best for customers.
3) This doesn’t necessarily have to mean the end for the companies or their ability to provide value and funds to their customers primarily, and can be consistent with other routes.
Ultimately I’m optimistic that Mr. Ray and others can help provide whatever is best.
— SBF (@SBF_FTX) November 11, 2022
“This doesn’t necessarily have to mean the end for the companies or their ability to provide value and funds to their customers primarily, and can be consistent with other paths. In the end, I am optimistic that Ray and others can help provide whatever is best,” wrote Bankman-Fried.
On 9 November, the former FTX chief\’s wealth plunged by 94% — from $15.6 billion to $992 million, and now even to zero.
Bitcoin reacted to the news with a drop. In the last 24 hours the asset fell by 3.2% (CoinGecko). At one point the price slipped below $16,300, but has since risen above $17,000.
On 11 November, analyst FatMan suggested that in the event of FTX bankruptcy there is a high likelihood of detailed information about users and their transactions being disclosed. For example, which filed for bankruptcy crypto-lending platform Celsius Network published 14,000 pages of data, containing full names and timestamps for all customer transactions, including deposits, withdrawals and liquidations.
Prepare your online presence. If FTX goes into bankruptcy, there is a good chance that full names and crypto balances of all users will be made public. It will be a privacy nightmare, and many will be blackmailed/harmed. Consider this an eventuality and take preemptive measures.
— FatMan (@FatManTerra) November 11, 2022
“This will be a privacy nightmare, and many will be blackmailed/harmed,” FatMan wrote.
Earlier on 6 November, Binance CEO Changpeng Zhao stated about the company\’s aim to shed the FTT token. Assets, together with BUSD, totaling around $2.1 billion, were the result of the company\’s exit from its portfolio investment in the platform.
8 November, Bankman-Fried and Zhao announced a strategic partnership, but on 10 November Binance walked away from acquiring FTX. The company said it would not be able to resolve the platform\’s problems.
Industry participants rushed to distance themselves from Sam Bankman-Fried\’s exchange and its affiliated Alameda Research. One of FTX\’s investors, venture firm Sequoia Capital, declared unrecoverable investments of $213.5 million.
According to the press, U.S. regulators have begun examining FTX\’s ties to its U.S. unit and Alameda Research. The Department of Justice has also shown interest in the platform\’s activities.
According to Bloomberg and WSJ, the platform\’s balance-sheet gap stood at $8 billion. However Reuters reported a higher figure — $9.4 billion.
The Bahamas Securities Commission blocked the assets of FTX Digital Markets and affiliated entities, and also suspended the company\’s license in the country.
The Japan Financial Services Agency ordered to suspend operations at the local unit of the exchange and to operate in close-only mode. It also emerged that regulator in Cyprus intends to suspend the license of FTX\’s European subsidiary.
Read ForkLog\’s Bitcoin news on our Telegram — crypto news, rates and analysis.