Sam Bankman-Fried, the CEO of cryptocurrency exchange FTX, resigned on Friday after the cryptocurrency business experienced a severe liquidity issue that compelled international regulators to step in. FTX filed for bankruptcy in the US on Friday.
After traders rushed to remove $6 billion (about Rs. 48,320 crore) off the platform in only 72 hours and rival exchange Binance abandoned a proposed rescue deal, the troubled cryptocurrency trading platform had been attempting to obtain billions in funds to stave off collapse.
In a statement posted on Twitter on Friday, the business announced that FTX, Alameda Research, a crypto trading fund it is linked with, and over 130 other businesses had started voluntary Chapter 11 bankruptcy proceedings in Delaware.
The statement indicated that John J Ray III has been chosen to succeed Bankman-Fried as CEO.
Following the start of the bankruptcy petition, FTX founder Bankman-Fried sent out a string of tweets saying, "I'm truly sorry, again, that we got up here."
Bankman-Fried expressed optimism that the group's new CEO would "help deliver whatever is best" in a series of tweets, saying that the bankruptcy filing "doesn't necessarily have to signal the end for the companies."
According to FTX Trading's bankruptcy petition, the company has between $10 billion and $50 billion (about Rs. 80,530 crore to Rs. 4,02,660 crore) in assets, $10 billion to $50 billion (roughly Rs. 800 crore to Rs. 4,02,660 crore) in liabilities, and more than 100,000 creditors.
Bitcoin fell to two-year lows as a result of the turbulence that shook the already ailing cryptocurrency markets this week.
According to sources cited by Reuters, FTX was frantically trying to raise about $9.4 billion (about Rs. 75,740 crore) from investors and competitors as the exchange fought to preserve itself following customer withdrawals.
Ray wrote in a Slack letter to FTX personnel that was seen by Reuters, "The Chapter 11 filing is a necessary step to allow the firm to examine the situation and establish plans to move forward for the benefit of stakeholders."
I understand that the latest information about the situation has been upsetting and difficult, but I also understand that filing for bankruptcy will be the start of a way forward.
Sequoia and SoftBank were two investors who had already devalued their FTX holdings. According to Anthony Scaramucci, the founder of SkyBridge Capital, the alternative investing company is attempting to repurchase its FTX holding.
Regulatory Examination
The 30-year-old crypto executive Bankman-fortune, Fried's which Forbes estimated to be approximately $17 billion (roughly Rs. 1,36,850 crore) just two months ago, has taken a sharp turn as a result of these events.
Following the FTX announcement, Bitcoin fell, falling 3.9 percent on the day to $16,816 (about Rs. 13 lakh) as of 1603 GMT (09:33 pm IST).
Shares of companies involved in the blockchain and cryptocurrencies fell as a result of the news.
FTT, the FTX token, fell 30% on Friday, resulting in a loss of 88% for the week.
Regulators from all across the world intervened as FTX's problems grew worse.
According to a person familiar with the investigations, the US Securities and Exchange Commission, Justice Department, and Commodity Futures Trading Commission are all looking into FTX.
The Securities and Exchange Commission of Cyprus has requested that FTX EU cease operations on November 9th, the regulatory body announced on Friday.
Inquiries for comment from Reuters went unanswered by Bankman-Fried.
According to Antoni Trenchev, co-founder of cryptocurrency lender Nexo, "Once Binance walked away from buying FTX after only 24 hours of due diligence, the writing was on the wall for FTX."
The second order effects are now visible, and we can find out which entities were exposed to FTX and Alameda in the ensuing phase of the fallout, which is now.
