FTX Files for Chapter 11 Bankruptcy, SBF Steps Down

FTX Trading filed for Chapter 11 bankruptcy on Friday while founder and CEO Sam Bankman-Fried resigned from his position and appointed John J. Ray III as its new chief executive.

After a very tumultuous week, cryptocurrency exchange FTX filed for Chapter 11 bankruptcy proceedings. The firm’s founder and CEO, Sam Bankman-Fried (SBF), stepped down from his role as CEO and appointed John J. Ray III as its new chief executive. SBF will remain with FTX while it undergoes the bankruptcy process. Ray said in a statement:

The immediate relief of Chapter 11 is appropriate to provide the FTX Group the opportunity to assess its situation and develop a process to maximize recoveries for stakeholders.

He continued:

The FTX Group has valuable assets that can only be effectively administered in an organized, joint process. 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.

In a matter of days, FTX went from a company with a valuation of $32 billion to bankruptcy as liquidity dried up and customers demanded withdrawals. Rival exchange Binance also made the decision not to continue with its plan to acquire the firm following a review of FTX’s internal data and financial commitments.

While the crisis unfolds at the firm, FTX also fell victim to a hack. Officials at FTX confirmed this on Telegram and urged users to avoid the website entirely and to delete all apps associated with FTX:

FTX has been hacked. FTX apps are malware. Delete them. Chat is open. Don’t go on the FTX site as it might download Trojans.

On Friday, $600 million left the exchange’s wallets with no clarity about who was behind the transactions and why. The wallet to which the funds are being transferred revealed that it had received funds from a host of international and U.S.-based wallets linked to the exchange.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.