After a week-long liquidity crisis followed by a withdrawal freeze, FTX has officially filed for Chapter 11 bankruptcy.
Meanwhile, its high-profile leader and former multi-billionaire – Sam Bankman-Fried (SBF) – has resigned as CEO.
- In a press release on Friday, FTX announced that it has commenced Chapter 11 proceedings in the United States alongside over 130 affiliated companies.
- One of those companies is Alameda Research – a trading desk launched by SBF thought to be deeply intertwined with FTX.
- FTX’s new CEO, John Jay Ray III, stated that Chapter 11 is needed to allow FTX to evaluate is situation. He said its aim is to maximize recoveries for stakeholders.
“The FTX Group has valuable assets that can only be effectively administered in an organized, joint process,” he continued. “I want to ensure every stakeholder that we are going to conduct this effort with diligence, thoroughness, and transparency.”
- SBF issued a statement shortly afterward, clarifying that FTX US had also filed for bankruptcy. Days earlier, the ex-CEO said over Twitter that FTX US “was not impacted” by the fallout.
“Hopefully things can find a way to recover. Hopefully, this can bring some amount of transparency, trust, and governance to them,” he said.
- Zane Tackett, former Head of Institutional Sales at FTX, claimed on Friday that FTX had over $8.8 billion in liabilities on its current balance sheet. Meanwhile, its total assets were only worth $6.1 billion in total, of which only $900 million were “liquid assets.”
- FTX froze withdrawals starting on Tuesday, and has so far only resumed withdrawals for people in the Bahamas, on regulator’s orders.
- Former Kraken CEO Jesse Powell believes that SBF displayed “sociopathic behavior” leading up to FTX’s collapse.