FTX, Alameda, FTX.us file for bankruptcy, Sam Bankman-Fried resigns

abdelaziz Fathi

The world’s second biggest crypto exchange, FTX filed for Chapter 11 bankruptcy protection on Friday afternoon as it grapples with a liquidly crunch and customers’ huge withdrawals triggered by a run-on-the-bank-like crisis. The founder and chief executive officer, Sam Bankman-Fried, is also stepping down.

Sam Bankman-Fried

The company, once valued at $32 billion earlier this year, said its crypto trading arm, Alameda Research, and US business, FTX.us, as well as 130 additional sister companies are part of the bankruptcy proceedings.

FTX’s bankruptcy filing said the company is currently unable to timely fill liabilities in the range of $10 billion to $50 billion, owed to more than 100,000 creditors, though it has assets in the same range.

Meanwhile, Sam Bankman-Fried has resigned but the 30-year-old founder of the exchange will remain to assist in an orderly transition. FTX appointed John Ray III as its new CEO and many employees are expected to stay on to manage day-to-day operations at the company. Bankman-Fried indicated that he wishes to appoint Stephen Neal as the firm’s new chairman of the board.

“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 the new FTX chief, 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 stakeholder that we are going to conduct this effort with diligence, thoroughness and transparency,” continued Ray.

Per leaked reports, FTX’s downfall stemmed from Bankman-Fried’s efforts to save other crypto firms, which ultimately left his trading unit in financial hole of up to $8 billion as customers rush for the exit. Concerns about the world’s second largest cryptocurrency exchange’s financial health reportedly triggered huge withdrawals in just three days.

However, the crisis only surfaced last week by reports that the balance sheet of Alameda Research was loaded with billions of dollars-worth of FTT tokens. The revelation implied that any volatility in the price of the exchange’s native FTT token could endanger the crypto hedge fund also owned by Bankman-Fried.

Stuck without a buyer, Bankman-Fried apologized to his staff and the crypto community, saying he had “fucked up” in his calculations and in his communications during the crisis. Now, the 30-year-old CEO is searching for alternative backers after Binance pulled out of the deal, citing its due diligence on FTX and reports about US investigations into the company.

Read this next

Digital Assets

As SPAC bubble bursts, Circle terminates its $9 billion merger with Concord

USDC stablecoin issuer, Circle has terminated its planned $9 billion SPAC merger with publicly traded blank-check company Concord Acquisition Corp.

Institutional FX

Integral reports lowest FX volume in two years

Foreign exchange trading volumes dropped in November across Integral’s trading platforms as currency markets saw a relatively quiet period after consecutive months of strong trading activity.

Technology

CDEX: Avelacom announces connectivity to Cboe Europe Derivatives

“We anticipate that many of our customers from Asia will be particularly interested in getting exposure to pan-European products via just one venue, which CEDX offers.”

Retail FX

BUX acquires Spanish Ninety Nine’s retail brokerage unit

“Thanks to this acquisition, Ninety Nine users will have access to a wide range of services provided by BUX, such as investing in Spanish, European and US stocks, ETFs, cryptocurrencies, fractional investing and the BUX Savings Plan.”

Digital Assets

SEBA and HashKey partner to expand crypto in Hong Kong and Switzerland

SEBA Bank AG has announced a new strategic partnership with HashKey Digital Asset Group as part of both firm’s expansion efforts in Hong Kong SAR. 

Executive Moves

Broadridge appoints Martin Koopman as Chief Product Officer

“Martin has a proven record of driving product innovation both at Broadridge and at previous companies. His vision and proven ability to execute will be invaluable as we become the foremost SaaS provider to the financial services industry.”

Digital Assets

DAM rolls out Moonwalkers v1 testnet ahead of support for yield-generating collateral

“We want to champion innovation by making it easier to securely direct stablecoin liquidity away from Ethereum towards newer networks without the constant vulnerabilities posed by bridges. d20 will help accelerate the adoption flywheel of emerging networks, and this is our first step towards making our omnichain promise a reality.”

Institutional FX

FIA EXPO: ICE’s Brian Norris talks ESG investment, carbon credits and market data

The FIA Futures & Options Expo, now in its 38th year, convened the listed derivatives dealers, thought industry leaders and other stakeholders for two days of networking.

Retail FX

Malaysia regulator exposes OctaFX clone, shady FB profiles

Malaysia’s financial regulator today warned online investors about the risks of following investment tips made on social-media platforms.

<