FTX, FTX US, and Alameda have officially filed for Chapter 11 bankruptcy.
On Twitter, Sam Bankman-Fried also revealed that he will be stepping down from his role as CEO of FTX.
SBF stated that he regrets the way things have turned out and that he hopes that the bankruptcy filing “can bring some amount of transparency, trust, and governance” to the blockchain.
Following that, the CEO announced an agreement with Tron’s Justin Sun to support TRX-based coins. However, the status of this agreement is still unclear.
The complaint alleges that Alameda Research had between US$ 10 and US$ 50 billion in passives and a similar range of investments. Also that “The funds will be available for distribution to unguaranteed investors.”
Today’s statement is a startling turn of events for one of the industry’s top brands. FTX went from being one of the leading exchanges – worth over $32 billion – to ultimately declaring bankruptcy.
How FTX Reached Rock Bottom
Bankman-Fried announced that FTX was experiencing “liquidity issues” at the start of the week.
Then its competitor, Binance, agreed to buy out the company, however, the deal went south the very next day.
According to a report, the FTX Group, which includes FTX.com, FTX US, Alameda Research, and about 130 other affiliated companies, filed a bankruptcy claim under Chapter 11.
According to the statement, FTX Digital Markets, FTX Australia, FTX Express Pay, and LedgerX (which conduct transactions similar to FTX US Derivatives) are not included in the filing.
FTX Is Not Done
Usually, companies file for “Chapter 7” bankruptcy, which determines total liquidation under the bankruptcy laws of the United States.
However, in this case, FTX filed for Chapter 11, which means that the company will continue to operate.
This will allow the company to continue its operations, giving it time to reorganize, negotiate and pay at least part of its debt to the government, associates, or clients.
“This doesn’t necessarily have to mean the end for the companies or their ability to provide value and funds to their customers chiefly, and can be consistent with other routes,” SBF wrote on Twitter. “I’m going to work on giving clarity on where things are in terms of user recovery ASAP.”
Market Movement After Bankruptcy Filing
The price of Bitcoin (BTC) dropped by more than US$ 1.000, reaching US$ 16.500 in a matter of minutes after SBF’s report. However, Bitcoin shows already indicates a small reaction. BTC returned to around $17,000 on the same day.
Meanwhile, Ethereum showed similar price movements, suffering a significant drop after the bankruptcy announcement, but going back up in the subsequent hours.
