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Cryptocurrency Platform FTX Goes Bankrupt in the US, Boss Resigns

Sam Bankman-Fried, co-founder of cryptocurrency platform FTX, has long been a strong advocate for more seamless access to the crypto market for the general public, particularly in the United States. Photo: OLIVIER DOULIERY / AFP/File
Source: AFP

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Crisis-hit cryptocurrency platform FTX has filed for bankruptcy in the United States and its chief executive, Sam Bankman-Fried, has resigned, it said on Friday, the latest blow in a saga that has reverberated across the digital currency landscape. .

The filing comes after the world’s largest cryptocurrency platform Binance agreed to buy its rival earlier this week but backed out, prompting market players to consider possible responses from regulators.

FTX Group announced in a statement on Friday that it has filed for Chapter 11 bankruptcy proceedings, adding that it has begun an “orderly process to review and monetize assets for the benefit of all global stakeholders.”

Chapter 11 is a US mechanism that allows a company to restructure its debts under court supervision while continuing to operate.

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This week’s financial chaos on FTX has seen major cryptocurrencies, including bitcoin, fall.

Bankman-Fried issued a “sincere” apology on Thursday, adding that FTX would “do everything possible to increase liquidity.”

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The cash-strapped company added in its statement that it has appointed John J. Ray as chief executive effective immediately.

“The immediate Chapter 11 relief is appropriate to give the FTX Group an opportunity to assess its situation,” Ray said in the release.

“Stakeholders need to understand that events have moved quickly and the new team has only recently been engaged.”

“Many FTX Group employees in various countries are expected to continue with FTX Group and assist Mr. Ray and the freelancers in their operations during the Chapter 11 proceedings,” the statement said.

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Binance agreed to buy FTX.com on Tuesday, before scrapping the acquisition just a day later.

Binance CEO Changpeng Zhao defended himself against accusations of any intentional plotting after the deal fell through.

“The fall of FTX is not good for anyone in the industry. Do not see it as a victory for us. User confidence is seriously affected,” he tweeted.

The platform’s collapse was a shock even to an already turbulent industry.

Bankman-Fried, who worked as a broker on Wall Street before moving to Hong Kong in 2017, had cultivated friends in Washington and enjoyed rave reviews when he stepped in to rescue other failing crypto firms earlier in the year.

The FTX turmoil is a dramatic reversal of fortune for the founder and crypto wunderkind.

“This is another black eye for the industry,” said David Holt, a cryptocurrency industry expert at CFRA, of the FTX woes.

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growing doubts

Doubts about FTX’s financial stability had already been raised, despite Bankman-Fried’s good reputation in Washington as a public face of cryptocurrency investment.

Attention had been focused on the relationship between FTX and Alameda Research, a trading house also owned by Bankman-Fried that was removed from the internet on Wednesday, according to reports.

Specialized media site CoinDesk reported that 40 percent of Alameda’s balance was made up of FTX FTT tokens. That raised eyebrows among crypto experts as a potential conflict of interest.

Media reports suggest that FTX needed to find around $8 billion to plug a massive hole in its finances and escape bankruptcy.

Meanwhile, Binance scrapped its FTX takeover deal on Wednesday night, citing recent press reports of mismanagement of customer funds and investigations by US regulators.

Bankman-Fried, the son of Stanford Law School professors and a graduate of the Massachusetts Institute of Technology, has long been an advocate for more seamless access to the cryptocurrency market for the general public, particularly in the United States. .

Source: AFP

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