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Cryptocurrency firm FTX Trading, a major digital asset exchange, has filed for bankruptcy and its billionaire founder Sam Bankman-Fried has resigned as chief executive officer, the company said on Friday.
“Again, I’m really sorry we ended up here,” Bankman-Fried said in one tweet thread on Friday. “Hopefully things will find a way to recover.”
FTX Trading and its subsidiary FTX US, along with Bankman-Fried itself, have been under investigation by the Texas State Securities Board since early October for offering unregistered securities to Texans through its high-yield cryptocurrency accounts. The company is not registered for the sale of securities in Texas, but has said it believes it is operating legally as there is an “active application for a license pending.”
The company’s collapse came after Changpeng Zhao, the CEO of cryptocurrency rival Binance, questioned FTX’s viability and refused to buy the company as part of a bailout offered by Bankman-Fried. According to several reports, investors rushed to withdraw their deposits and the company could not cope with the influx of withdrawals.
The Delaware filing – which includes FTX Trading, FTX US, Alameda Research and about 130 other affiliated companies collectively known as FTX Group – is intended to allow the group to “evaluate its situation and initiate a process to maximize returns for to develop the interest groups”. FTX Group’s newly appointed CEO, John J. Ray III said in a statement.
A Bloomberg report on Friday said that Bankman-Fried’s fortune dwindled “from $16 billion to zero in days” as a result of the “fall of his crypto empire.” In March, the report said, his fortune reached $26 billion.
Bankman-Fried was a major supporter of Texas gubernatorial candidate Beto O’Rourke and Donated $1 million to Democrats Campaigning in the quarter leading up to Tuesday’s election. O’Rourke lost his race to Republican Gov. Greg Abbott.
Several FTX Subsidiaries – LedgerX LLC, FTX Digital Markets Ltd., FTX Australia Pty Ltd. and FTX Express Pay Ltd – are not involved in the insolvency proceedings.
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