Chaotic Week Ends with FTX Filing for Bankruptcy
Posted by Colin Lambert. Last updated: November 12, 2022
After a week of ups and downs, the stunning collapse of former cryptocurrency darling FTX was completed on Friday when the company filed for bankruptcy in the US and CEO Sam Bankman-Fried resigned.
While the attempted rescue deal with Binance did not include FTX US (formally West Realm Shires Services Inc), this entity, along with Alameda Research and 130 other entities, is part of the bankruptcy proceedings. LedgerX and certain offshore companies are not included, however many are under pressure as regional regulators move to protect investors by issuing suspension notices or announcing investigations into the entities’ activities.
Following Bankman-Fried’s resignation, John Ray III has been appointed CEO of the FTX Group. Bankman-Fried will remain “to assist in an orderly transition”. The company y says in an announcement that “many” employees of the FTX Group in various countries are expected to continue with the FTX Group and assist Ray and independent professionals in its operations during the Chapter 11 proceedings.
“The immediate relief of Chapter 11 is appropriate to provide the FTX Group the opportunity to assess its situation and develop a process to maximise recoveries for stakeholders,” says Ray. “The FTX Group has valuable assets that can only be effectively administered in an organised, joint process. I want to ensure every employee, customer, creditor, contract party, stockholder, investor, governmental authority and other stakeholder that we are going to conduct this effort with diligence, thoroughness and transparency.
“Stakeholders should understand that events have been fast-moving and the new team is engaged only recently,” he adds. “Stakeholders should review the materials filed on the docket of the proceedings over the coming days for more information.”
The knock-on effect of the bankruptcy could be serious for the crypto industry, not least because FTX had positioned itself as a saviour to firms that had previously run into trouble. As such the rescue of firms like Voyager Digital and BlockFi – both of whom were in part bailed out or intended to be bought by FTX – is now in serious doubt.