FTX Announces Chapter 11 Bankruptcy, Crypto Crash Imminent?
FTX Bankruptcy Proceedings Updates: Troubled crypto exchange on Friday announced it is going ahead with chapter 11 bankruptcy. In a announcement of the major decision, the company said FTX and Alameda Research commenced the bankruptcy proceedings. This effectively brings to an end Sam Bankman-Fried’s attempt to pool in capital to rescue the companies out of the liquidity crisis.
“FTX.com, Alameda Research and around 130 additional affiliated companies commenced voluntary proceedings under Chapter 11 of the United States Bankruptcy Code.”
FTX New CEO: Sam Bankman-Fried Resigns
The announcement said that the proceedings allow for beginning “an orderly process to review and monetize assets for the benefit of all global stakeholders.” Meanwhile, the company announced a replacement for Sam Bankman-Fried as the new FTX CEO. John J. Ray III has been appointed Chief Executive Officer of the FTX Group, it mentioned. However, Sam Bankman-Fried, who has resigned from his role as CEO, will remain at FTX group to assist the transition.
Amid speculation that many FTX employees were quitting due to the liquidity crisis, the group said employees across various countries would continue to work for the new FTX CEO John J. Ray III. Speculation was rife that a bulk of employees of FTX legal and compliance were quitting.
What Next For FTX & Investors
The chapter 11 bankruptcy proceedings could mean enough time for the FTX group to evaluate its assets and liabilities. The overall objective of the bankruptcy implementation is to protect the investor interests while giving a leeway for the company to assess the way forward. The development provides 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 process, the company said. It also said that the new team has been engaged only recently and that it could take more time to figure things out at the crypto company.
Following the announcement from FTX, Sam Bankman-Fried tweeted saying he was hoping to find a way to recover. He has once again apologized to the crypto community saying that he was shocked to see things unravel the way they did.
2) I'm really sorry, again, that we ended up here.
Hopefully things can find a way to recover. Hopefully this can bring some amount of transparency, trust, and governance to them.
Ultimately hopefully it can be better for customers.
— SBF (@SBF_FTX) November 11, 2022
Meanwhile, the crypto market reacted in a mixed way to the FTX bankruptcy announcement. In the last one hour, Bitcoin (BTC) price rose by around 1.70%, according to price tracking platform CoinMarketCap.
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