FTX files for bankruptcy protection, and its CEO Bankman-Fried steps down

On Nov. 11, the crypto exchange FTX filed for bankruptcy protection in the US, the Bahamas-based company said. Chapter 11 bankruptcy filing attributed to Alameda Research estimates the company has $10 billion to $50 billion in liabilities. Also, FTX CEO and founder Sam Bankman-Fried resigned from his role.

FTX Group, which includes FTX.com and FTX US crypto exchanges, Alameda Research entity, and “approximately 130 additional affiliated companies,” have all filed for Chapter 11 bankruptcy proceedings, a press release said. FTX Digital Markets, FTX Australia, FTX Express Pay, and FTX US Derivatives (LedgerX) are not included. The full list of companies includes Alameda and various local holdings, BitPesa, Blockfolio, over a dozen FTX entities, and Quoine, among others.

Chapter 11 bankruptcy proceedings are filed when the company hopes or expects to be able to restructure its operations, rather than Chapter 7 bankruptcy proceedings, which simply liquidate assets. Companies filing for Chapter 11 bankruptcy are able to continue their daily operations.

Also, Sam Bankman-Fried, FTX CEO and founder, resigned from his role but will “assist in an orderly transition.” John Ray III, who previously oversaw the Enron Corporation bankruptcy, will replace him as the new CEO.

“In the short term we have some long days and hard work ahead of us,” Ray said in a message to employees. He called the bankruptcy filing “the beginning of a path forward.” Events have been “fast-moving” and the new team in place only just began, he stated.

According to a bankruptcy filing, Alameda Research had between $10 billion and $50 billion in liabilities and a roughly equal amount in assets that estimated that “funds will be available for distribution to unsecured creditors.”

Bankman-Fried apologized in a Twitter post after the bankruptcy, saying “hopefully things can find a way to recover.”

“I’m piecing together all of the details, but I was shocked to see things unravel the way they did earlier this week,” he said. “I will, soon, write up a more complete post on the play-by-play, but I want to make sure that I get it right when I do.”

Within minutes after news of the bankruptcy, Bitcoin’s price fell over $1,000, dropping to $16,500.

Earlier this week, Bankman-Fried announced FTX had “liquidity issues,” saying Binance had agreed to acquire the company. Later, Binance pulled out, and FTX CEO announced a deal with Tron’s head Justin Sun; however, its status remains unclear. The crypto market has quickly plummeted below $1 trillion following FTX troubles.