Crypto giant FTX to file for bankruptcy, CEO Sam Bankman-Fried steps down
The filing represents a stunning turn for the cryptocurrency exchange, once seen as the face of the crypto industry thanks to its voluminous marketing and advertising efforts.
The crypto giant FTX and its affiliated companies have started the process of filing for Chapter 11 bankruptcy, with founder Sam Bankman-Fried stepping down as CEO.
The filing represents a staggering turn for the cryptocurrency exchange, once reportedly valued at $32 billion and seen as the face of the industry thanks to its voluminous marketing and advertising efforts.
The resignation of Bankman-Fried, 30, is stunning. He was a crypto wunderkind who graced the cover of Forbes and Fortune and had emerged as a major Democratic donor and a leader of what has been dubbed the "effective altruism" movement, which sought to reshape philanthropy.
Over the past week, the exchange faced the equivalent of a bank run as observers and customers called into question whether the exchange was both liquid — meaning it could come up with currency on demand to pay customers looking to withdraw funds — and solvent, meaning its loans and investments were worth more than its debts.
"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," John J. Ray, the new CEO of FTX Group, said on the company's verified Twitter account.
Bankman-Fried sent out a series of tweets on Friday stating his hope that FTX would be able to continue as a going concern following its bankruptcy.
“I’m piecing together all of the details, but I was shocked to see things unravel the way they did earlier this week,” he said.
Chapter 11 bankruptcy allows a company to come up with a plan to reorganize itself and keep its business alive while it works to pay back its creditors.
Media outlets have reported that the Securities and Exchange Commission and Justice Department are now investigating FTX.
The fallout from the crisis has also cascaded into Bankman-Fried's philanthropic group, Future Fund. Late Thursday, the fund's team announced it was resigning.