Bankman-Fried resigns from FTX, puts empire in bankruptcy
FTX had agreed earlier this week to sell itself to bigger rival Binance
California: Sam Bankman-Fried’s digital-asset empire filed for Chapter 11 bankruptcy in Delaware, capping a rapid downfall for the 30-year-old entrepreneur and onetime crypto king.
More than 130 entities tied to FTX.com, FTX US and trading firm Alameda Research Ltd. were part of the filings, according to a Twitter statement Friday, with the Alameda petition alone listing assets and liabilities of at least $10 billion each. Chapter 11 bankruptcy lets a company continue operating while it works out a plan to repay creditors.
Bankman-Fried resigned as chief executive officer of the FTX Group as part of the filings, and John J. Ray III was appointed to replace him, the statement said. Ray, a turnaround and restructuring expert, has previously served senior roles in bankruptcies including Enron Corp.
Crisis quickly befell FTX this month after prices for the exchange’s native crypto token, FTT, plummeted and users raced to withdraw their assets. Rival crypto exchange leader Changpeng “CZ” Zhao had earlier said he would sell some $529 million of coins due to “recent revelations that came to light,” appearing to allude to a CoinDesk report that raised questions about Alameda’s financial health.
Crypto assets dropped on the news, with Bitcoin slumping as much as 8 per cent before regaining some ground. Ether and smaller tokens also declined. Solana, which was backed by Alameda, tumbled 10 per cent. FTX’s implosion came almost exactly one year after Bitcoin peaked at around $69,000. BlockFi, a troubled crypto lender that received emergency financing from FTX US earlier this year, on Thursday said it will pause client withdrawals citing “a lack of clarity” over the status of Bankman-Fried’s empire.
Zhao’s Binance Holdings tentatively agreed to buy FTX.com amid the exchange’s liquidity crunch, but backed out of the deal following a short period of due diligence. Bankman-Fried then pivoted to hold talks for last-ditch financing, including with fellow crypto entrepreneur Justin Sun.
Now US authorities are investigating Bankman-Fried as well as FTX. His wealth, which stood at around $16 billion at the start of the week, has vanished along with the reputation of a crypto wunderkind who just recently was regarded as a savior of swathes of the industry.
FTX’s implosion came almost exactly one year after Bitcoin peaked at around $69,000.