Cryptocurrency exchange FTX has initiated Chapter 11 bankruptcy proceedings in the United States, with founder Sam Bankman-Fried stepping down as CEO.
Around 130 affiliated companies, including FTX US and Alameda Research, are also filing for bankruptcy. However, options platform Ledger X, along with FTX Digital Markets, FTX Australia, and FTX Express Pay, are not part of these proceedings.
John J. Ray will take over as CEO, stating, “The immediate relief of Chapter 11 is appropriate to provide FTX Group the opportunity to assess its situation and develop a process to maximize recoveries for stakeholders.”
In recent days, Bankman-Fried has been attempting to secure a rescue package for the firm amid a liquidity crisis that prompted customers to withdraw their funds. A potential acquisition by rival Binance collapsed during due diligence due to the discovery of significant financial issues, leading FTX to seek over $9 billion in funding from investors.
Regulatory scrutiny is also increasing, as both the SEC and CFTC are investigating the company in the U.S. Additionally, it was recently revealed that FTX Europe is set to have its license suspended, while FTX Japan has been ordered to cease operations.
The announcement of the bankruptcy filing resulted in a sharp decline in cryptocurrency prices, with Bitcoin dropping more than five percent within minutes.
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