FTX has filed for Chapter 11 Bankruptcy, according to a statement from the company via its official Twitter handle.
The embattled crypto-exchange also disclosed that Chief Executive Sam Bankman-Fried resigned from his position but would remain at the company to assist with an orderly transition. FTX said it would begin a process to review and monetize assets for stakeholders.
FTX posted a statement stating that it has commenced Chapter 11 proceedings in the United States. According to the statement, the voluntary proceedings included all the Exchange’s 130 additional affiliated companies.
See the statement below:
According to the company, John J. Ray III has been appointed as the new CEO of the Group. FTX Trading Ltd., the organization in charge of the international trading website FTX.com, Mr. Bankman-trading Fried’s company Alameda Research, and the organization in charge of FTX US, the platform for users in the United States, are all parties to the bankruptcy case.
The latest development comes after Binance reportedly pulled out of the deal to purchase the company on Tuesday. Binance disclosed that it was walking away from the deal after going through its financials and structure.
Binance claimed, via its Twitter handle, that regulatory pressure and other factors impacted their decision to work away. It claimed that the company reviewed FTX books and decided to withdraw from the non-binding agreement. The exchange said:
“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com.”
Before then, companies’ websites linked to the FTX crypto exchanges were taken down amidst liquidity challenges.
Binance was set to support FTX through the tough time fully but was met with what was beyond their control.
Binance CEO, CZ said: “Every time a major player in an industry fails, retail consumers will suffer,” adding that the ecosystem will eventually become more resilient with the weeding out of bad players.
What next for FTX
Just yesterday, the founder, in a series of Tweets, apologized to the millions of investors and customers who had invested using the platforms for his poor decisions and lackadaisical attitude toward ensuring that the company stays afloat. He insinuated that his lack of communication might be the major reason behind the company’s current peril.
Read the rest of the tweet here:
According to that statement, the company was doing everything to raise liquidity, but it is evident that the current problems the exchange is facing have finally overwhelmed it.
Crypto market crash
Bitcoin and all altcoins collapsed following the news that Binance declined to purchase the Exchange. The update sent Bitcoin to a new yearly low, declining to $15,600 before recovering to $16,200 at press time, losing 11% of market value in the last day, according to Coinmarketcap data.
The platform’s native token, $FTT, took a staggering hit after the announcement and is now trading well into the single digits. It was sold for $2.7, down around 80% on Wednesday. It was still trading at $22-$25 dollar early Tuesday.
The market saw a huge crypto loss in the last 24 hours. According to CoinMarketCap statistics, more than $100 billion worth of value was wiped out from crypto assets due to the price drop. Compared to the total crypto market capitalization of $935 billion 24 hours ago, the market cap is currently at $819 billion, effectively erasing $116 billion in one day.
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