The FTX crisis of the past few days has reached its conclusion: bankruptcy.
In a press release shared on Twitter, the crypto exchange announced that it had filed for Chapter 11 bankruptcy "to begin an orderly process to review and monetize assets for the benefit of all global stakeholders."
The firm's sister entity algorithmic trading firm Alameda Research, its American subsidiary FTX.US, and roughly 130 affiliated entities will also be filing for bankruptcy.
Ledger X LLC, FTX Digital Markets Ltd., FTX Australia Pty Ltd. and FTX Express Pay Ltd. have not been included in the filing.
FTX Used Client Funds, FTT Tokens, and Robinhood Shares to Prop Up Alameda: Report
After Alameda Research suffered a series of losses in May and June this year, the trading firm’s founder Sam Bankman-Fried set at least $4 billion in FTX funds to Alameda, according to a Reuters report citing people familiar with the operations. A portion of these funds reportedly were FTX customer deposits, two people told Reuters, although their exact value is unclear. Bankman-Fried did not tell other FTX executives about the move, the people said, adding he was afraid this information could l...
The memo also announced that the firm's CEO and founder Sam Bankman-Fried is resigning from his role. John J. Ray III has been appointed CEO and will work with other "independent professionals" during the proceedings.
"The FTX Group has valuable assets that can only be effectively administered in an organized, joint process," said Ray, adding that he and his team would conduct the proceedings for all parties affected by the FTX collapse with "diligence."
What happened to FTX?
Once a starlet of the crypto industry, the enamored crypto exchange has come crashing down in less than a week.
Following "certain revelations" Binance CEO Changpeng Zhao wouldn't specify, Binance began selling its FTT token holdings, FTX's native exchange token. Binance held these tokens as part of an equity exit from the firm in 2021.
FTX Bankruptcy Likely Without Cash Injection, Says CEO SBF: Report
Cryptocurrency exchange FTX may be forced to declare bankruptcy if it does not receive an infusion of fresh capital, founder and CEO Sam Bankman-Fried reportedly told investors on Wednesday. That’s according to a report from Bloomberg, citing an unnamed source who was privy to the conversation. Bankman-Fried reportedly told investors that FTX is short as much as $8 billion following a liquidity crisis. The Wall Street Journal cited the same figure, noting that FTX needs a cash infusion to cover...
As the token plummeted, many investors began withdrawing their funds from the FTX exchange en masse leading to FTX to pause withdrawals, causing further panic. It then emerged on Tuesday that Binance had established a tentative agreement to acquire FTX until it backed out of the deal a day later. Zhao said the crypto exchange was "beyond our ability to help" without sharing additional details.
FTX's financial woes are, however, reportedly severe. The firm's head of institutional sales Zane Tackett shared on Twitter that the firm had liabilities amounting to nearly $8.8 billion but added that those figures were not "concrete." Sources close to the matter also reported that the firm used a mix of client funds, FTT tokens, and shares in Robinhood to prop up the trading firm Alameda.
Given the high profile of the firm, having penned deals with sports stars like Tom Brady and a massive $135 million deal to rename the Miami Heat stadium, regulators have been quick to ramp up their rhetoric amid the crash.
Tom Brady: ‘I Want to be a Pioneer’ in Crypto
Why exactly does Tom Brady, seven-time Super Bowl-winning quarterback, keep tweeting about crypto? Funny you should ask: He answered that question, and a few others, during a Q&A on Twitter Spaces tonight that was mostly intended to promote his new role as a brand ambassador for FTX. "I want to be a pioneer in this field," Brady told FTX founder and CEO Sam Bankman-Fried in a half-hour long conversation. Tom Brady and Gisele Bündchen Invest in Crypto Exchange FTX Brady discussed his recent foray...
The White House's Press Secretary Karine Jean-Pierre said that “without proper oversight of cryptocurrencies, they risk harming everyday Americans.”
Though FTX has come to the end of the line with its latest filing, there are still concerns of continued crypto contagion.
Just yesterday, crypto lending platform BlockFi paused withdrawals on the platform, saying that it is "not able to operate business as usual" given the lack of clarity around FTX, FTX US, and Alameda.
