FTX to file for US bankruptcy protection as CEO resigns

Sam Bankman-Fried of FTX has resigned.

The world’s second-largest cryptocurrency exchange, FTX, has filed for bankruptcy protection in the US and the founder, Sam Bankman-Fried, has resigned as chief executive.

In a statement, FTX said a range of related businesses including Alameda Research, a trading firm also owned by Bankman-Fried, had filed for chapter 11 proceedings “in order to begin an orderly process to review and monetise assets for the benefit of all global stakeholders”.

The statement added that Bankman-Fried, 30, had resigned as CEO of FTX Group. FTX’s precipitous fall from the top of the crypto industry started last week when reports emerged that the balance sheet of Alameda was loaded with billions of dollars worth of FTT, the exchange’s crypto token, implying that both businesses were vulnerable to a decline in the token’s value.

A declaration on Sunday by Binance, the world’s biggest crypto exchange, that it was selling its FTT holdings was followed by a bank-style run on FTX as customers rushed to withdraw a reported $6bn in 72 hours.

What's your view on this issue?

You can tell us here

The FTX collapse shows that regulators must monitor the crypto space more closely, says Naeem Aslam, chief market analyst at Avatrade.

“The biggest destruction of wealth has happened today in the history of crypto as FTX files for bankruptcy, leaving its customers hanging high and dry," they said.

“This is the best time for regulators to come and start tightening up the grip, we can no longer afford to have different privileges for crypto exchanges and the whole space needs to be monitored by the regulators.

Aslam predicts that bitcoin could continue to slide if the fall of FTX causes a ‘domino effect’.

“As for Bitcoin, this is certainly another major set back and this is causing pressure on the price.”

Bitcoin is already down around 63% so far this year, having peaked at $69,000 a year ago.

Guardian Service