Embattled crypto exchange FTX is filing for bankruptcy as its founder resigns from his role as the firm’s chief executive.
In a new press release, FTX says it is filing for Chapter 11 bankruptcy while appointing a replacement for CEO Sam Bankman-Fried, the company’s founder.
“[FTX and its affiliated groups] have commenced voluntary proceedings under Chapter 11 of the United States Bankruptcy Code in the District of Delaware in order to begin an orderly process to review and monetize assets for the benefits of all global stakeholders.”
The filing comes as Bloomberg labels Bankman-Fried’s net worth at zero, after reaching as high as $26 billion in the crypto bull market and $16 billion one week ago.
The filing includes FTX, FTX.US and Alameda Research. Bankman-Fried will be replaced as CEO by John J. Ray III. However, the former billionaire will remain with the company to assist with the bankruptcy proceedings.
Ray goes on to state that taking care of FTX stakeholders, customers, and employees will be his first order of business as the company’s new CEO.
“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.”
Bankman-Fried says that he’s optimistic that FTX will live on and continue to serve its customers will Ray at the firm’s helm.
“[Filing for bankruptcy] doesn’t necessarily have to mean the end for the companies or their ability to provide value and funds to their customers chiefly, and can be consistent with other routes. Ultimately, I’m optimistic that Mr. Ray and others can help provide whatever is best.”
FTX is accused of mishandling customer funds and lending billions of dollars in customer deposits to Alameda Research, its quantitative trading branch, a move that Bankman-Fried reportedly described as “a poor judgment call.”
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