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FTX Group of companies has officially filed for Chapter 11 Bankruptcy in the United States, marking one of the darkest weeks in the history of the digital currency ecosystem.
According to the update shared on its Twitter page, the bankruptcy proceeding will feature Alameda Research, the trading platform front-running for Sam Bankman-Fried as well as 130 affiliated companies.
Press Release pic.twitter.com/rgxq3QSBqm
— FTX (@FTX_Official) November 11, 2022
The development has been very shocking to investors across the board as FTX went from a $32 billion valuation to bankruptcy in less than a week. The bankruptcy was filed in the District of Delaware, and it also followed the official resignation of Sam Bankman-Fried as the Chief Executive Officer of the company.
The company has named John J. Ray III as the new CEO effective immediately, although Bankman-Fried is protracted to stay on in the company to ensure a very smooth proceeding moving forward.
The Bankruptcy detail is contained in a 23-page document that shows FTX has as many as 100,000 creditors. The company said its assets range from $10 billion to $50 billion and that its liabilities also range from $10 to $50 billion respectively. In a statement, the new CEO, John said the bankruptcy filing is necessary in order to help investors recover as much as they can be based on how the situation has been.
“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,” he said, adding that “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.”
FTX Bankruptcy Fuels Disappointed
The fall of FTX, once ranked as the second biggest exchange after Binance will remain a mystery that many stakeholders may not be able to fathom.
The operational handling of the company has been adjudged to be a mystery to some of its core executives, most of whom have resigned. Coinspeaker reported earlier that Sam Bankman-Fried transferred about $4 billion to Alameda Research for the failed bailout of Voyager Digital, a move he made without consulting his executives.
Anthony Scaramucci, a friend of Bankman-Fried whose firm is also an investor in FTX said he felt as though he had been duped. He said the operational mismanagement of funds was not made public as at the time he and other investors were backing the company.
Scaramucci said he flew down to the Bahamas to provide a lending hand to the distressed crypto leader but soon discovered that the firm’s trouble was beyond what immediate cash injections could solve.
With the bankruptcy filing, FTX has now plunged the fate of BlockFi into uncertainty alongside the future of Voyager Digital creditors as the exchange’s US subsidiary won the bid for its assets a few months ago.