FTX declared bankruptcy and CEO Sam Bankman-Fried resigned, as regulators worldwide froze the company’s remaining assets and investigated how one of the world’s largest and most-trusted crypto exchanges had suddenly collapsed.
At least $6 billion worth of customer deposits in FTX are likely lost.
Bankman-Fried had attempted to engineer a rescue of his firm by investors, rivals, and anyone else with billions of dollars to spare. Binance, its top competitor and the proximate cause of FTX’s collapse, had tentatively agreed to buy FTX before backing out. That left the exchange without any options.
FTX made its bankruptcy filing in the United States and included FTX.US, which is a supposedly separate entity and had maintained a degree of separation from the crisis. The bankruptcy also included Alameda Research, Bankman-Fried’s hedge fund. Early reporting on FTX’s collapse suggests that Alameda traded with FTX customer funds, despite claiming the opposite.
More than 100 other entities are named in the bankruptcy filing. The corporate structure of FTX is an incredibly complex web of banking charters, tax shelters, and related-party transactions. The controlling entity, FTX Trading Ltd, is incorporated in Antigua and Barbuda and headquartered in the Bahamas. Regulators in both countries have said they are investigating.
FTX Group, as the web of FTX’s global, bankrupt entities is now known, named John J Ray III as its new CEO. It said Bankman-Fried would stay on as an employee to help with the transition.
“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,” Ray, who has experience in the bankruptcy field from the time of the Enron collapse, said in a statement. “The FTX Group has valuable assets that can only be effectively administered in an organized, joint process.”