FTX files for bankruptcy; CEO Sam Bankman-Fried resigns

After a very traumatic week, FTX has filed for bankruptcy. The once-third largest crypto exchange announced that West Realm Shires Services Inc. (d.b.a FTX US, Alameda Research Ltd. and approximately 130 additional affiliated companies (together, the “FTX Group”), have commenced voluntary proceedings under Chapter 11 of the United States Bankruptcy Code in the District of Delaware in order to begin an orderly process to review and monetise assets for the benefit of all global stakeholders.

Some of the subsidiaries, LedgerX LLC, FTX Digital Markets Ltd., FTX Australia Pty Ltd. and FTX Express Pay Ltd. are not included in the Chapter 11 proceedings.

The company also announced the resignation of FTX Group CEO, Sam Bankman-Fried and the appointment of John J Ray as the new CEO. Sam Bankman-Fried will remain to assist John J Ray in an orderly transition.

The new CEO said that the immediate relief of Chapter 11 was appropriate to provide the company the opportunity to assess its situation and develop a process to maximise recoveries for stakeholders.

The world came tumbling down for FTX when Binance announced after 24 hours that it was backing out of the arrangement to acquire FTX. Binance had signed an agreement to acquire FTX to rescue it from its liquidity crunch. Binance said it decided not to pursue the potential acquisition after the corporate due diligence unearthed issues of mishandling of customer funds and alleged US agency investigations.

The day after Binance backed out of the acquisition bid, Sam Bankman-Fried said in a series of tweets that FTX was looking to raises funds and was in talks with several entities. Apparently this did not yield much fruits.