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In a somewhat expected turn of events, troubled crypto exchange FTX.com and its American arm FTX.US have filed for bankruptcy. This also includes the sister company, market-marker Alameda Research, along with 130 additional affiliated companies, which together made up the “FTX Group”
The Chapter 11 bankruptcy filing came within less than a week from when the FTX insolvency saga first began unfolding. The bankruptcy proceeding will take place in the United States, in the district of Delaware
Per a statement issued by the company, FTX Group’s founder and CEO Sam Bankman-Fried has also resigned. In his place, John J. Ray has been appointed as the CEO, who will look over the transition. Many employees working under the FTX Group may also be able to retain their positions for the time being
The company has reportedly filed for bankruptcy to “review and monetize assets for the benefit of global stakeholders.” Regarding the same, Ray said,
The FTX Group has valuable assets that can only be effectively administered in an organized, joint process.
Although, LedgerX, FTX Digital Markets Ltd., FTX Australia, and FTX Express Pay are not part of these proceedings
SBF had yesterday revealed that the company requires a large cash injection or it would need to file for bankruptcy. This came after a $9.4 billion hole was found in its balance sheet which forced the exchange to halt withdrawals. Although, it is expected that this gap could grow further in the coming days, as more information is revealed
Moreover, as per insider information, the company only has about $900 million in liquid assets
FTX Contagion Spreads
FTX was earlier going to be acquired by Binance, which later backed out after conducting due diligence. Tron founder Justin Sun had also made a similar offer but has presumably backed out as well.
FTX is nevertheless facing legal investigations in nearly seven countries, including the USA
Users had been hoping against bankruptcy, as it could lead to their funds being frozen for an extended period. Billions of dollars in users’ cryptocurrencies are stuck on the exchange, which briefly opened withdrawals for Bahamas KYC holders today.
It is speculated that this was done to give a way out to employees and preferred investors before the inevitable bankruptcy filing
Nevertheless, after a brief rally earlier today, cryptocurrency markets once again plunged on this update. At press time, Bitcoin and Ether had dropped 3.4% and 4.5% in the past hour, respectively
Solana had dipped 10.5% during the same time, after seeing a 28% hike earlier today
The biggest loser, however, is FTX’s native token FTT, which tanked 20.9% in the past hour. After seeing a drop of nearly 85% in the past week, it appreciated almost 30% today. However, recovery for FTT seems unlikely now as users rush to dump the worthless token