2022 Claims Another Crypto Victim: FTX Files Chapter 11 Bankruptcy

After making fruitless attempts to raise $8 billion in financing, FTX.com has started Chapter 11 bankruptcy proceedings. A recent announcement from the company states that FTX US, Alameda Research, and 130 other related organizations will participate in the bankruptcy process.

Sam Bankman-Fried Steps Down as FTX CEO

Sam Bankman-Fried, the FTX Group’s CEO, has resigned, and John J. Ray III has been named in his place. Regardless, SBF will continue to work with the company as it enters its next phase, according to official reports.

Ray noted in the bankruptcy filing: “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.”

A Chapter 11 filing shields a company’s assets from creditors and allows it to continue operating. With the submission, the corporation can suggest reorganizing its debt commitments. If not, the court will act in its place. Court approval is required before the corporation may sell its assets in order to pay off its obligations.

Ray further stated in the filing: “I want to assure every employee, customer, creditor, contract party, stockholder, investor, governmental authority, and other stakeholders that we are going to conduct this effort with diligence, thoroughness, and transparency.”

On November 6, 2022, FTX had a liquidity issue because it only had $400 million of the $5 billion in client withdrawal requests on hand. A devastating study that revealed a significant portion of the assets owned by Alameda, FTX’s sibling trading firm, were made up of the token FTT, which is relatively illiquid, was the catalyst for the wave of withdrawals.