November 29, 2022

Health & Fitness Journal

Top Health and Fitness Resource

Cryptocurrency platform FTX files for bankruptcy, chief resigns amid turmoil

5 min read

(FILES) In this photo file taken on February 9, 2022 is a smartphone screen showing the logo of FTX, the crypto exchange platform, along with a screen showing the FTX website in Arlington, Virginia. – Troubled cryptocurrency platform FTX has filed for bankruptcy in the US and its CEO Sam Bankman-Fried has resigned, it said on Nov. 11, 2022, the latest blow in a saga reverberating across the digital currency landscape. FTX Group said in a statement on Friday that it had filed for Chapter 11 bankruptcy, adding that it had initiated an “orderly process of asset verification and monetization for the benefit of all global stakeholders.” (Photo by OLIVIER DOULIERY / AFP)

Troubled cryptocurrency platform FTX has filed for bankruptcy in the United States and its CEO Sam Bankman-Fried has resigned, it said Friday, the latest blow in a saga echoing across the digital currency landscape.

The filing comes after the world’s largest cryptocurrency platform, Binance, agreed to buy its rival earlier this week but backed out, prompting market participants to consider potential regulators’ reactions.

FTX Group said in a statement on Friday that it had filed for Chapter 11 bankruptcy, adding that it had initiated an “orderly process of asset verification and monetization for the benefit of all global stakeholders.”

Chapter 11 is a US mechanism that allows a company to restructure its debt under court oversight while continuing to operate.

This week’s financial chaos on FTX has caused major cryptocurrencies, including Bitcoin, to crash.

(FILES) In this file photo taken on Feb. 9, 2022, Samuel Bankman-Fried, founder and CEO of FTX, says during a Senate Agriculture, Food and Forestry Committee hearing on “Investigating Digital Assets: Risks, Regulation and Innovation,” on Capitol Hill in Washington, DC. – Troubled cryptocurrency platform FTX has filed for bankruptcy in the US and its CEO Sam Bankman-Fried has resigned, it said on Nov. 11, 2022, the latest blow in a saga reverberating across the digital currency landscape. FTX Group said in a statement on Friday that it had filed for Chapter 11 bankruptcy, adding that it had initiated an “orderly process of asset verification and monetization for the benefit of all global stakeholders.” (Photo by SAUL LOEB / AFP)

Bankman-Fried issued a “sincere apology” on Thursday, adding that FTX will “do everything we can to raise liquidity.”

The ailing company added in its statement that it had appointed John J. Ray as chief executive, effective immediately.

“Chapter 11’s immediate relief is appropriate to allow FTX Group to assess its situation,” Ray said in the statement.

“Stakeholders should understand that events have changed rapidly and the new team has only recently been hired.”

“Many FTX Group employees in various countries are expected to remain with FTX Group and assist Mr. Ray and independent professionals in their operations during the Chapter 11 proceedings,” the statement said.

Binance agreed to buy FTX.com on Tuesday — before abandoning the acquisition just a day later.

Binance CEO Changpeng Zhao defended himself against allegations of a targeted conspiracy after the deal fell through.

“The drop in FTX is not good for anyone in the industry. Don’t look at it as a win for us. User confidence is badly shaken,” he tweeted.

The collapse of the platform came as a shock, even to an already turbulent industry.

Bankman-Fried, who worked as a Wall Street broker before moving to Hong Kong in 2017, had been nurturing friends in Washington and basking in enthusiastic tributes when he stepped in to bail out other ailing crypto companies earlier this year.

The turmoil in FTX, valued at $32 billion at the time, is a spectacular twist of fate for the founder and one-time cryptocurrency prodigy.

“This is another black eye for the industry,” said David Holt, a cryptocurrency industry expert at CFRA, of FTX’s woes.

The fall from grace even extended to the world of sports, where the Miami Heat announced that their FTX Arena would be rebranded and the Mercedes Formula One team said it had suspended a sponsorship deal with FTX and previously removed the company’s logos from his cars away at the Sao Paulo Grand Prix this weekend.

The Heat tweeted Friday that they and Miami-Dade County would “take immediate action to terminate our relationship with FTX,” including seeking “a new arena naming rights partner.”

– Growing Doubts –

Doubts about FTX’s financial stability had already been mounting, despite Bankman-Fried’s good standing in Washington as the public face of crypto investing.

Attention had focused on the relationship between FTX and Alameda Research, a trading house also owned by Bankman-Fried, which was taken offline on Wednesday, reports said.

Specialist media site CoinDesk reported that 40 percent of Alameda’s balance sheet consisted of FTX’s FTT tokens, raising concerns about a potential conflict of interest.

“We don’t know exactly what happened, but from all the reports it looks like there has been a lot of wrongdoing,” Howard Fischer, a former SEC attorney, told the Health & Fitness Journal network on Friday, forecasting that some customers would sue to recover their investments.

The company is currently under investigation by the SEC, according to The New York Times, citing sources familiar with the matter.

The regulator, which does not normally comment on ongoing investigations, did not respond to AFP’s request for comment on Friday, nor did the Justice Department.

According to media reports, FTX had to raise around $8 billion to plug a huge hole in its finances and avoid bankruptcy.

Binance, meanwhile, halted its FTX acquisition deal late Wednesday, citing recent press reports of mismanagement of client funds and possible investigations.

The son of Stanford Law School professors and a graduate of the elite Massachusetts Institute of Technology, Bankman-Fried has long been a vocal advocate for smoother access to the crypto market for the general public, particularly in the United States.

Kevin O’Leary, president of a venture capital firm and television personality who had invested in FTX, called for urgent regulations to protect the industry on Friday.

“I lost money in the account but I will still invest in crypto,” he told Health & Fitness Journal.

Copyright © All rights reserved. | Newsphere by AF themes.