FTX files for bankruptcy, Sam Bankman-Fried steps down as CEO

FTX files for bankruptcy, Sam Bankman-Fried steps down as CEO

FTX, one of the leading crypto exchanges that ran into liquidity issues, has now filed for bankruptcy and Sam Bankman-Fried has stepped down as its CEO. The company made the announcement via a statement which was published on Twitter on Friday afternoon (UTC).

In the announcement, FTX said that FTX Trading Ltd, West Realm Shires Services Inc, Alameda Research Ltd and another 130 affiliated companies that make up the FTX Group have filed for bankruptcy under Chapter 11 in the District of Delaware. Under the process, the group’s assets will be reviewed and monetized to benefit global stakeholders – this could mean that those with frozen assets could get some of their funds back.

While Sam has resigned as CEO, he will stick around to “assist in an orderly transition” as John J. Ray III takes over the role of CEO. The statement said that “many” FTX Group employees will keep their jobs while Chapter 11 proceedings go ahead, but this implies some will be let go immediately and the rest after proceedings complete.

Commenting on the bankruptcy, the new CEO said:

“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. 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. Stakeholders should understand that events have been fast-moving and the new team is engaged only recently.”

Given the size of FTX, some other exchanges, including BlockFi, had exposure to it and contagion could cause their failure too. BlockFi said earlier that it would be halting withdrawals until things cleared up with FTX. If you have money on an exchange, you need to transfer it to a wallet you have the private key or seed phrase to. Leaving funds on an exchange is akin to going to the shop and leaving the items you bought at the shop instead of taking them home.