Crypto giant FTX collapses into bankruptcy
In order to get judicial protection while it searches for a means to give users their money back, the troubled cryptocurrency exchange FTX has filed for bankruptcy in the US. According to the corporation, former head Sam Bankman-Fried has likewise retired as CEO. The 30-year-old, who oversaw the second-largest cryptocurrency exchange in the world, has experienced a dramatic shift in circumstances. His FTX empire’s demise in less than a week has shaken faith in the already unstable cryptocurrency market.
“I’m really sorry, again, that we ended up here. Hopefully things can find a way to recover,” Mr Bankman-Fried, nicknamed the ‘King of Crypto’, wrote on Twitter on Friday.
“I was shocked to see things unravel the way they did.”
Prior to the meltdown, Mr Bankman-Fried had been one of the stars of the crypto scene, drawing comparisons to investment magnate Warren Buffett, with a net worth estimated at more than $15bn (£12.8bn) as recently as Monday.
But rumours earlier this week that FTX and other firms owned by Mr Bankman-Fried were on shaky financial ground prompted a mass of customers to try to withdraw funds from FTX, an exchange used to buy and sell digital tokens.
Facing a cash crunch, Mr Bankman-Fried tried to organize a bailout but that failed, leaving FTX scrambling to raise billions of dollars and many customers unable to access their money.
By filing for Chapter 11 bankruptcy, the company can continue operating, while restructuring its debts under court supervision.
FTX said the goal was to “begin an orderly process to review and monetize assets for the benefit of all global stakeholders”.
“The FTX Group has valuable assets that can only be effectively administered in an organised, joint process,” said new chief executive John J Ray III, a lawyer who previously worked at a venture capital firm and has experience with high-profile bankruptcy cases.
In the filing, FTX estimated that it had between $10bn and $50bn in assets and liabilities and more than 100,000 creditors.
The proceeding involves FTX as well as Alameda Research, a trading firm founded by Mr Bankman-Fried, and roughly 130 affiliates, according to the statement FTX shared on Twitter.
Those include FTX’s operations in the US, which Mr Bankman-Fried had said on Thursday were unaffected.
Mr Bankman-Fried said “this doesn’t necessarily have to mean the end for the companies or their ability to provide value and funds to their customers chiefly, and can be consistent with other routes.
“Ultimately I’m optimistic that Mr. Ray and others can help provide whatever is best”.
For now, Thomas Culham, from Kingston, said he has been unable to withdraw the £2,000 he had put into FTX – a “big blow” as his funds in FTX were “decent chunk” of his investment portfolio.
