Crypto giant FTX and its affiliated companies have started the process of filing for Chapter 11 bankruptcy, with founder and CEO Sam Bankman-Fried stepping down as CEO.
The filing represents a staggering turn for the cryptocurrency exchange, once reportedly valued at $32 billion and seen as the face of the crypto industry thanks to its voluminous marketing and advertising efforts.
The resignation of Bankman-Fried, 30, is stunning. He was a crypto wunderkind who graced the cover of Forbes and Fortune and had emerged as a major Democratic donor and a leader of what has been dubbed the “effective altruism” movement, which sought to reshape philanthropy.
Over the past week, the exchange faced the equivalent of a bank run as observers and customers called into question whether the exchange was both liquid — meaning it could come up with currency on demand to pay customers looking to withdraw funds — and solvent, meaning its loans and investments were worth more than its debts.
“I want to ensure every employee, customer, creditor, contract party, stockholder, investor, governmental authority and other staeholder that we are going to conduct this effort with diligence, thoroughness and tranparency, wrote John J. Ray, the new CEO of FTX Group, in a press release posted to the company’s verified Twitter account.
Chapter 11 bankruptcy allows a company to come up with a plan to reorganize itself and keep its business alive while it works to pay back its creditors.
Media outlets have reported the Securities and Exchange Commission and Justice Department are now investigating FTX.
The fallout from the crisis has also cascaded into Bankman-Fried’s philanthropic group, Future Fund. Late Thursday, the fund’s team announced it was resigning.
“We are so sorry that it has come to this,” the team said in a letter, adding: “To the extent that the leadership of FTX may have engaged in deception or dishonesty, we condemn that behavior in the strongest possible terms. We believe that being a good actor in the world means striving to act with honesty and integrity.”
The news sent the price of Bitcoin plummeting to as low as $16,500.
FTX emerged as one of the most recognizable brands of the recent crypto boom, with sponsorhip deals that put it’s logo on the Miami Heat arena and on the shirts of every MLB umpire.
Jason Abbruzzese contributed.
Source: | This article originally belongs to Nbcnews.com
