Embattled FTX files for bankruptcy, Sam Bankman-Fried resigns in raging crypto crisis
On Friday morning, after a weeklong gauntlet that saw FTX perish in slow motion, the cryptocurrency exchange—once worth $32 billion—will file for Chapter 11 bankruptcy.
As part of the move, FTX founder Sam Bankman-Fried, known as SBF, will step down from his role as chief executive. He will be replaced by John J. Ray III, the lawyer who was hired to clean up the mess during Enron’s infamous collapse in the mid-aughts.
FTX, which was valued at $32 billion during a fund raise as recently as this January, shocked the crypto world this week as details emerged of miscalculations and risky bets made by senior leadership, which were hidden not just from the public but also from other employees within the company.
After FTX racked up over $10 billion in liabilities—which were collateralized largely in its own minted token, FTT—it faced a severe liquidity crunch after a leaked balance sheet from its sister company, Alameda Research, prompted a swan dive in FTT’s value. Customers rushed to take money out of FTX, resulting in a classic bank run.
Bankman-Fried, once considered the face of crypto investing and a savant who had revolutionized the industry, has seen his net worth fall from roughly $16 billion last week, to under $1 billion as of Thursday.
This story is developing . . .
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