FTX has filed for bankruptcy and the crypto company also announced that founder Sam Bankman-Fried has resigned as CEO.
FTX, Bankman-Fried's trading firm Alameda Research, and roughly 130 affiliated companies have begun bankruptcy proceedings “to begin an orderly process to review and monetize assets for the benefit of all global stakeholders,” the company announced on Twitter Friday.
The filing includes FTX.US, a separate operation Bankman-Fried had previously claimed was isolated from the parent group's woes. FTX.US had recently warned customers that it would have to stop trading in the coming days.
John J. Ray III, a lawyer who helped run Enron post-bankruptcy, has been named CEO of the FTX Group. Bankman-Fried, often known as SBF, will remain “to assist in an orderly transition,” the company said.
FTX's fall was a sudden, jarring collapse of a crypto powerhouse, evident in Ray’s initial statement as CEO. He appealed to stakeholders to “understand that events have been fast-moving and the new team is engaged only recently.”
“I want to assure every employee, customer, creditor, contract party, stockholder, investor, governmental authority and other stakeholder[s] that we are going to conduct this effort with diligence, thoroughness and transparency,” Ray said in a statement.
The announcement capped a wild week for FTX and the entire crypto industry.
FTX had been one of crypto’s largest exchanges. But disclosures about its questionable finances triggered a meltdown. Binance announced early this week that it had agreed to buy the company but then announced that FTX had financial issues that were “beyond our control or ability to help.”
Even before its filing, FTX's woes were having spill-on effects on other companies. BlockFi, a crypto lender FTX had agreed to backstop earlier this year with a credit line and an option to buy the company, said Thursday it could not conduct "business as usual" and had stopped customer withdrawals.
The broader crypto market, which was already reeling from a dramatic crash that wiped out $2 trillion in value, took another hit as the market value of issued tokens fell below $900 million. The price of bitcoin dipped below $17,000.