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Saturday, Dec 10, 2022

Sam Bankman-Fried steps down as FTX CEO as his crypto exchange files for bankruptcy

Sam Bankman-Fried steps down as FTX CEO as his crypto exchange files for bankruptcy

Alameda Research and approximately 130 additional affiliated companies are part of the voluntary proceedings.
Sam Bankman-Fried, founder and chief executive officer of FTX Cryptocurrency Derivatives Exchange, during an interview on an episode of Bloomberg Wealth with David Rubenstein in New York, US, on Wednesday, Aug 17, 2022.

Sam Bankman-Fried's cryptocurrency exchange FTX has filed for Chapter 11 bankruptcy in the U.S., according to a company statement posted on Twitter. Bankman-Fried has also stepped down as CEO and has been replaced by John J. Ray III, though the outgoing chief will stay on to assist with the transition.

Alameda Research, Bankman-Fried's crypto trading firm, and approximately 130 additional affiliated companies are part of the voluntary proceedings.

"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," said the new FTX chief, Ray.

"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," continued Ray.

He added that stakeholders should understand that events have been fast-moving and the new team is engaged only recently and that they should review the materials filed on the docket of the proceedings over the coming days for more information.

It caps off a tumultuous week for one of the biggest names in the sector.

In the space of days, FTX went from a $32 billion valuation to bankruptcy as liquidity dried up, customers demanded withdrawals, and rival exchange Binance ripped up its nonbinding agreement to buy the company. FTX founder Sam Bankman-Fried admitted on Thursday that he "f---ed up."

Anthony Scaramucci, the founder of SkyBridge Capital and short-time Trump communications director, flew to the Bahamas this week to help Bankman-Fried as an investor and friend. When he got there, he says, it appeared beyond the point of a simple liquidity rescue. He said he didn't see evidence of this mishandling when he and other investors first screened FTX as a potential business partner.

"Duped I guess is the right word, but I am very disappointed because I do like Sam," Scaramucci said on CNBC's Squawk Box Friday morning. "I don't know what happened because I was not an insider at FTX."

The Chapter 11 proceedings exclude the following subsidiaries: LedgerX LLC, FTX Digital Markets Ltd., FTX Australia Pty Ltd., and FTX Express Pay Ltd.
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