Yesterday we reported a bad day for crypto as one of the biggest crypto exchanges sent shock wave through the industry. Today, FTX has filed for bankruptcy protection.
The company says it was unable to meet a torrent of withdrawals, marking a stunning collapse for Sam Bankman-Fried’s crypto empire that was valued at $32 billion just months ago.
The filing in a federal court in Delaware, includes FTX’s US entity, Alameda Research and about 130 affiliated companies.
The collapse of FTX comes after a whirlwind 10 days in which Bankman-Fried desperately sought billions of dollars to save his company after customers rushed to pull their assets out of the business following concerns surrounding its financial health and links between the exchange and Alameda.
Bankman-Fried also resigned as chief executive and will be replaced by John J Ray III, a restructuring specialist who oversaw the Enron and Nortel Networks bankruptcy cases.
“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,” Ray said, adding that the company had “valuable assets that can only be effectively administered in an organised, joint process”.
In just over three years, FTX had secured a $32 billion valuation and had wooed a roster of blue-chip investors including Paradigm, SoftBank, Sequoia Capital and Singapore’s Temasek.
Venture capital firms Sequoia and Paradigm have in recent days marked their investment down to zero.
Bankman-Fried, who was one of crypto’s most known faces, had in recent days sought $6 billion to 8 billion to stem a liquidity crunch. The 30-year-old had apologised for the crisis that engulfed his company: “I’m sorry. That’s the biggest thing. I fucked up, and should have done better.”
