SINGAPORE/LONDON (Reuters) – FTX, one of the world’s leading crypto-asset exchanges, announced on Friday the initiation of U.S. safeguard proceedings and the resignation of its chief executive, Sam Bankman-Fried, after a liquidity crisis that shook the entire sector and led the financial authorities to intervene.
The company had been trying for several days to raise fresh capital in an attempt to relaunch itself, but its difficulties had only amplified the movement of massive withdrawals of deposits by its customers, valued at six billion dollars (5.8 billion euros). euros) in just 72 hours.
In a statement posted on Twitter, FTX said that its parent company and its brokerage subsidiary Alameda Research, along with some 130 other legal entities of the group, have started a procedure for placement under the protection of Chapter 11 of the American bankruptcy law. in the state of Delaware.
John J. Ray III has also been appointed Managing Director of the FTX Group. Sam Bankman-Fried has stepped down but will help ensure an orderly transition, the statement said.
These announcements come two days after the abandonment of the plan to take over FTX by its competitor Binance, which had forced the platform to urgently seek investors or competitors likely to bring it some 9.4 billion. dollars (9.1 billion euros) according to several sources.
The fortune of 30-year-old Sam Bankman-Fried was estimated by Forbes at around $17 billion just two months ago.
“I’m so sorry, again, that we’ve come to this,” the FTX founder said in a series of posts on Twitter Friday.
He assures that the safeguard procedure “does not necessarily mean the end for companies” and says he is “optimistic” about the ability of his successor to general management to “favor what will be best, whatever it is”.
In its request for safeguard proceedings, FTX Trading states that its assets represent between 10 and 50 billion dollars, that its liabilities are in the same range and that it has more than 100,000 creditors.
FTX TAKES BITCOIN DOWN
The fall of industry icon Sam Bankman-Fried and FTX’s bankruptcy filing risk fueling doubts about the financial health and viability of the whole cryptocurrency, months after the TerraUSD crash , a “stablecoin”, which had already led several specialized companies to the brink of bankruptcy.
Bitcoin, the best-known cryptocurrency, lost 4.22% to $16,811.00 after FTX’s announcements. It fell to $15,362 on Wednesday, its lowest level in two years, before regaining ground thanks to the general rebound in world markets linked to the slowdown in US inflation.
The FTT, the “token” created by FTX plunged by more than 25%. Its drop since the beginning of the week exceeds 80%.
Even before the announcement of the safeguard procedure, FTX was the target of investigations by the Securities and Exchange Commission (SEC), the American courts and the Commodity Futures Trading Commission (CFTC), the supervisory authority for the markets of financial derivatives in the United States, according to a source close to the investigations.
For its part, the Cypriot financial market authority announced on Friday that it had asked the European branch of the group on Wednesday to suspend its activities.
“When Binance backed out of buying FTX after just 24 hours of extensive account review, FTX’s fate was sealed,” commented Antoni Trenchev, co-founder of cryptoasset lending specialist Nexo.
“We are now entering the next stage of decay, where we will see side effects and find out which entities were exposed to FTX and Alameda.”
Asked by Reuters, Sam Bankman-Fried did not immediately respond to a request for comment.
(Reporting Rae Wee in Singapore, Hannah Lang in New York, David Shepardson in Washington, Aishwarya Nair in Bangalore, Georgina Lee in Hong Kong, Elizabeth Howcroft and Alun John in London and Jasper Ward in the Bahamas; French version Marc Angrand, editing by Jean -Stephane Brosse)
Copyright © 2022 Thomson Reuters