FTX files for Chapter 11 Bankruptcy As Disgraced CEO Sam Bankman-Fried Resigns
Today, FTX announced chapter 11 bankruptcy and disgraced CEO Sam-Bankman-Fried (SBF) will resign, being replaced by John Ray. This includes FTX US.
The news comes after a series of gut punches to both FTX and the crypto community. Chapter 11 bankruptcy means that FTX will attempt to restructure and open as a new firm to pay off customers and other stakeholders.
1) Hi all:— SBF (@SBF_FTX) November 11, 2022
Today, I filed FTX, FTX US, and Alameda for voluntary Chapter 11 proceedings in the US.
The United States DOJ launched an investigation into FTX on Wednesday. In addition, the US SEC has started a probe into SBF based on his actions.
The Wall Street Journal reported that SBF lent over $16 billion of customer funds to Alameda Research, which now appears to have been part of the scheme all along. As it turns out, the vast majority of Alameda's reserves was FTT and various Solana tokens, which have all plummeted in value. SBF was an outspoken supporter of Solana.
The debacle started when Binance CEO Changpeng Zhao (CZ) learned about the inconsistencies in FTX's balance sheet, and Binance began to dump FTT, FTX's official token.
This sell pressure crashed the price of FTT, resulting in SBF's $15 billion net worth plummeting all the way to zero in less than a week.
Binance offered to buy FTX to stabilize the crypto market, but after reviewing the company's balance sheet, they decided against the acquisition.
In a lengthy tweet thread, SBF made a series of apologies, and subtly attacked Binance CEO CZ for his takedown of FTX. There's speculation that CZ took down SBF as a way of warning those in the industry who advocate for strict regulation.
20) At some point I might have more to say about a particular sparring partner, so to speak.— SBF (@SBF_FTX) November 10, 2022
But you know, glass houses. So for now, all I'll say is:
well played; you won.
It's obvious that CZ is not a fan of regulation and ironically, SBF is the one in trouble with regulators. SBF's actions have led to nicknames like "Scam Bankman-Fraud." Some people are even speculating that he may be handed a prison sentence.