In a statement posted on FTX's Twitter's official account, the company announced that they have begun voluntarily initiating Chapter 11 bankruptcy proceedings. The news came despite founder Sam Bankman-Fried (SBF)’s efforts to raise funds to fill the $9.4 billion loophole left by poor fund management.
Sam Bankman-Fried's cryptocurrency exchange FTX has filed for Chapter 11 bankruptcy protection in the United States, and SBF has now resigned from its position as CEO. He has been replaced by John J. Ray III but will continue to assist with the “orderly transition.”
About 130 affiliates have also participated in voluntary lawsuits, including Alameda Research, a trading company close to FTX, which allegedly received billions of dollars in customer funding from FTX.
New CEO Ray said "Chapter 11 direct relief is suitable for providing the FTX Group with the opportunity to assess its situation and develop processes to maximize the recovery of funds for stakeholders,"
"The FTX Group has valuable assets that can only be effectively managed through an organized joint process. I want to make sure that every employee, client, creditor, contractor, shareholders, investors, government agencies and other stakeholders, we will work hard, thoroughly and transparently for this," he added.
It is worth noting that FTX US has been included in the litigation process, although outgoing CEO Sam Bankman-Fried said on Twitter a few days ago.
More information will be released in the next few days, and stakeholders "should understand that the incident is moving rapidly and the new team has only recently been involved," Ray added at the end of the announcement.
cryptocurrency market reacted immediately to the news, selling out the same way earlier this month about the FTX fund first broke. After the news of bankruptcy of
, the cryptocurrency price collapsed immediately
As expected, the cryptocurrency price gave a negative response to the news. At the time of writing, BTC has dropped 2.5% in the past few minutes, ETH has dropped 1.7% at the same time, and the broader cryptocurrency market is selling. There was a price rebound shortly after that, but it is hard to say whether this price rebound can maintain its momentum.
How many other companies are affected by bankruptcy remains to be seen, but given the scale of FTX's operation, it is safe to assume that the losses will be huge. For example, Sequoia Capital (Sequoia Capital) has marked its $250 million investment at $0.
Due to the plunge of cryptocurrency, the market will enter the Shenzhen Bear. I would like to remind all elderly people in the currency circle to do a good job in risk control.
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