NEW YORK: Beleaguered cryptocurrency platform FTX has filed for bankruptcy in the United States and its chief executive, Sam Bankmanfried, has resigned, he said on Friday, the latest setback in a saga that has rocked the digital currency landscape. There is a buzz.
The filing comes after the world’s largest cryptocurrency platform Binance agreed to buy its rival earlier this week but backed out, leading market players to consider possible regulatory backlash.
FTX Group announced in a statement on Friday that it had filed for Chapter 11 bankruptcy proceedings, adding that it had “assessed and monetized assets for the benefit of all global stakeholders.” A systematic process has been initiated.”
Chapter 11 is an American procedure that allows a company to restructure its debts under court supervision while continuing to operate.
This week’s financial chaos at FTX has seen major cryptocurrencies including Bitcoin.
Bankman-Fried issued a “sincere” apology on Thursday, adding that FTX “will do everything possible to increase liquidity.”
The cash-strapped company added in its statement that it has appointed John Jay Ray as chief executive with immediate effect.
“Chapter 11 immediate relief is appropriate to give FTX Group an opportunity to assess its situation,” Ray said in the statement.
“Stakeholders should understand that events are moving quickly and the new team has been busy lately.”
“Many FTX Group employees in various countries are expected to continue with FTX Group and assist Mr. Ray and the independent professionals in his operations during the Chapter 11 proceedings,” the statement said. will.”
Binance agreed to buy FTX.com on Tuesday – before ending the takeover just a day later.
Binance Chief Executive Changpeng Zhao defended himself against any allegations of collusion after the deal fell apart.
“FTX going down is not good for anyone in the industry. Don’t see it as a win for us. Consumer confidence has been badly shaken,” he tweeted.
The demise of the platform also came as a shock to an already turbulent industry.
Bankman Freud, who worked as a broker on Wall Street before moving to Hong Kong in 2017, had cultivated friends in Washington and earlier in the year when he stepped in to rescue other ailing crypto companies. So he paid a wonderful tribute.
The turmoil in FTX, at one point valued at $32 billion, is a stunning reversal of fortune for the founder and one-time cryptocurrency wunderkind.
“This is another black eye for the industry,” said David Holt, CFRA’s cryptocurrency industry expert, of FTX’s woes.
The fall from grace even extended to the sports world, where the Miami Heat announced it was set to rename its FTX Arena and the Mercedes Formula One team said it was suspending its sponsorship deal with FTX. has given and previously removed the company’s logo from its cars. Sao Paulo Grand Prix weekend.
The Heat tweeted Friday that it and Miami-Dade County are “immediately taking action to terminate our business relationship with FTX,” including “finding a new naming rights partner for the arena.”
Growing Doubts
Despite Bankman-Fried’s good standing in Washington as the public face of crypto-investment, doubts about FTX’s financial stability were already growing.
According to reports, the focus was on the relationship between FTX and Alameda Research, a trading house also owned by Bankman-Fried that was pulled from the Internet on Wednesday.
Specialist media site CoinDesk reported that 40% of Alameda’s balance sheet consists of FTX’s FTT tokens, raising concerns about a potential conflict of interest.
“We don’t know exactly what happened, but from all the reporting it looks like there was a lot of mismanagement,” Howard Fisher, a former lawyer for the US Securities and Exchange Commission (SEC), said JEE News on Friday, predicting Some clients may sue to recover their investment.
According to the JEE News, citing sources familiar with the matter, the company is currently under investigation by the SEC.
The regulator, which normally does not comment on ongoing investigations, did not respond to AFP’s request for comment on Friday, and neither did the Justice Department.
Media reports indicate that FTX needed to find about $8 billion to plug a huge hole in its finances and avoid bankruptcy.
Binance, meanwhile, scrapped its FTX takeover deal late Wednesday, citing recent press reports about mismanagement of client funds and a possible investigation.
Bankman-Fried, the son of Stanford Law School professors and a graduate of the elite Massachusetts Institute of Technology, has long been a vocal advocate for smooth access to the crypto market for the general public, particularly in the United States.
Kevin O’Leary, president of a venture capital firm and television personality who invested in FTX, on Friday called for urgent regulations to protect the industry.
“I lost money in the account, but I’m still going to invest in crypto,” he told JEE News.
