Crypto Exchange FTX Files for Bankruptcy as CEO Steps Down

Twitter isn’t the only notable tech company this week. After a stunningly rapid collapse, crypto exchange has filed for Chapter 11 bankruptcy protection, while founder Sam Bankman-Fried has resigned as CEO.

The bankruptcy filing concerns FTX Trading, FTX US, Alameda Research and about 130 other companies under the umbrella of the FTX Group, according to a press release. Some others, such as FTX Australia and FTX Express Pay, are not involved in the bankruptcy proceedings. Chapter 11 bankruptcy doesn’t necessarily mean a company is dead in the water — it allows a company to continue trading while it devises a plan to repay creditors. However, it is a difficult position to get out of.

“The immediate relief from Chapter 11 is to provide the FTX Group with the opportunity to assess its situation and develop a process to maximize recovery for stakeholders,” new CEO John J. Ray III (a former Enron chairman who came to to oversee the liquidation of that company) said in a statement. “The FTX Group has valuable assets that can only be managed in an organized, collaborative process. I want” [assure] every employee, customer, creditor, contractor, shareholder, investor, government agency and other stakeholder that we are going to conduct this effort with dedication, thoroughness and transparency.” Ray suggested that stakeholders should remain patient, noting that “events have moved quickly – are moving and the new team only recently got engaged.”

The company quickly found itself in trouble after the price of its original FTT token took a nosedive and many users withdrew their cryptocurrency. After reports that FTX was facing a liquidity crisis, Changpeng Zhao, the CEO of rival crypto giant Binance, said his company would sell about $529 million worth of FTT. That wiped out all but the value of the token.

Binance then agreed to oppose FTX . However, it was a day later, citing concerns raised while conducting due diligence. Bankman-Fried went on to say: and said on Thursday that he was doing everything he could to and He got up a day later.

“This doesn’t necessarily mean the end of the companies or their ability to primarily provide value and money to their customers, and may be consistent with other routes,” said Bankman-Fried. wrote on Twitter after the bankruptcy filing. “I’m going to work on getting clarity on where things stand on user recovery as soon as possible.” Bankman-Fried added that he will publish soon a more complete, play-by-play account of what happened to FTX.

Meanwhile, reports that the Department of Justice and the Securities and Exchange Commission are investigating FTX. It’s not clear when the DOJ began investigating the company’s transactions, but the SEC’s investigation has reportedly been underway for several months.

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