Monday, May 20, 2024

Crypto collapse – FTX files for bankruptcy

(BBC News) Embattled cryptocurrency exchange FTX has filed for bankruptcy in the U.S., seeking court protection as it looks for a way to return money to users.

Former boss Sam Bankman-Fried has stepped down as chief executive, the company said.

It is a massive turn of fortunes for the 30-year-old, who had headed the world’s second largest crypto exchange.

In just over a week, his FTX empire has collapsed, shaking confidence in the already troubled crypto market.

“I’m really sorry, again, that we ended up here. Hopefully, things can find a way to recover,” 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, 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 $15 billion as recently as Monday.

But rumours earlier this week that FTX and other firms owned by 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, 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 organized, 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 $10 billion and $50 billion in assets and liabilities, and more than 100,000 creditors.

The proceeding involves FTX as well as Alameda Research, a trading firm founded by Bankman-Fried, and roughly 130 affiliates, according to the statement FTX shared on Twitter.

Those include FTX’s operations in the U.S., which Bankman-Fried had said on Thursday were unaffected.

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.”


BIG Media
BIG Media
Our focus is on facts, accurate data, and logical interpretation. Our only agenda is the truth.

BIG Wrap

Death toll rises to six in New Caledonia riots

(Al Jazeera Media Network) Another person has been killed in France’s Pacific Islands territory of New Caledonia as security personnel try to restore order, taking...

Hell on Earth’ as violence escalates in Sudan’s el-Fasher

(Al Jazeera Media Network) The United Nations human rights chief has expressed horror over the escalating violence in Sudan’s North Darfur region as one...