FTX Files Chapter 11 Bankruptcy as CEO Sam Bankman-Fried Resigns

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The negative ripple effect across the industry started last night with Blockfi, another crypto service company, freezing customer withdrawals due to the FTX issues. Following the announcement, Bitcoin’s price fell sharply before recovering slightly and staying below $17,000.

personal belongings of Bankman-Fried, as recorded by Bloomberg, peaked at about $26 billion in March this year before falling in value from a reported $16 billion to zero in just a few days. Yesterday, The Wall Street Journal and Reuters reported that the founder, known as SBF, had used $10 billion in client money from the exchange to support his other crypto firm, Alameda Research. In a series of tweets, SBF said, “I fucked up and should have done better,” without specifically admitting how the deficit came about.

A liquidity crisis spurred on by CoinDesk’s report on the schemeand a statement from Binance founder Changpeng Zhao saying he planned to sell his cache of FTX’s crypto token triggered a liquidity crisis that exposed a reported $8 billion hole in the beleaguered company’s balance sheet.

A note on the company’s Twitter account said Bankman-Fried would remain to participate in an “orderly transition.” We’ve already seen investors in FTX like Sequoia mark the value of their property up to $0 while everyone else waits to find out if there’s anything of value left. On Friday morning, the Mercedes AMG F1 team announced a suspension of its sponsorship deal with FTXthough there’s no word yet on other sports partnerships, such as the naming rights to the Miami Heat’s basketball arena.

Newly appointed CEO John J. Ray III is quoted as saying, “The FTX Group has valuable assets that can only be managed effectively in an organized, collaborative process. I wanted to assure every employee, customer, creditor, contractor, shareholder, investor, government and other stakeholders that we will carry out this effort with dedication, thoroughness and transparency.”

Update Nov 11, 10:34 ET: Added bankruptcy filing and noted that Sir Lewis Hamilton’s F1 car will not bear FTX branding during this weekend’s upcoming race.


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