Sam Bankman-Fried resigns, FTX files for bankruptcy

Sam Bankman-Fried, Founder and Managing Director of FTX Cryptocurrency Derivatives Exchange, during an interview on an episode of Bloomberg Wealth with David Rubenstein in New York, U.S., Wednesday August 17, 2022.

Jeena Moon | Bloomberg | Getty Images

Sam Bankman-Fried’s FTX cryptocurrency exchange has filed for Chapter 11 bankruptcy in the United States, according to a company statement posted on Twitter. Bankman-Fried also resigned as CEO and was replaced by John J. Ray III, although the outgoing leader will stay on to help with the transition.

Alameda Research, Bankman-Fried’s crypto trading company, and about 130 other affiliates are part of the voluntary process.

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“The immediate Chapter 11 relief is appropriate to give the FTX Group the opportunity to assess its situation and develop a process to maximize recoveries for stakeholders,” said new FTX chief Ray.

“FTX Group has valuable assets that can only be managed effectively through an organized and joint process. I want to assure every employee, customer, creditor, contractor, shareholder, investor, government authority and other stakeholder that we will pursue this effort with diligence, thoroughness and transparency,” continued Ray.

He added that stakeholders should understand that events are changing rapidly and that the new team has only recently been hired and that they should review the documents filed in the proceedings over the next few days for more information. .

It caps off a tumultuous week for one of the biggest names in the business.

In the space of days, FTX went from a $32 billion valuation to bankruptcy as liquidity dried up, customers demanded withdrawals and rival exchange Binance tore up its non-binding deal to buy the company. FTX founder Sam Bankman-Fried admitted on Thursday that he “f—ed up.”

Anthony Scaramucci, the founder of SkyBridge Capital and short-term Trump communications director, flew to the Bahamas this week to help Bankman-Fried as an investor and friend. When it got there, he says, it seemed like more than a simple cash rescue. He said he saw no evidence of this mismanagement when he and other investors first selected FTX as a potential trading partner.

“Fooled, I guess that’s the right word, but I’m very disappointed because I love Sam,” Scaramucci said on CNBC’s Squawk Box Friday morning. “I don’t know what happened because I was not an insider at FTX.”

The Chapter 11 procedure excludes the following subsidiaries: LedgerX LLC, FTX Digital Markets Ltd., FTX Australia Pty Ltd. and FTX Express Pay Ltd.

This is breaking news. Please check for updates.

CNBC’s Jack Stebbins contributed to this report.

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