According to a statement on Twitter, Sam Bankman-cryptocurrency Fried’s exchange FTX has applied for Chapter 11 bankruptcy protection in the United States. Bankman-Fried has also resigned down from his position as CEO, giving way to John J. Ray III; the outgoing chief will remain for a short while to help with the transition.
The Alameda Research, Bankman-cryptocurrency Fried’s trading firm, and the FTX.us, the company’s U.S. subsidiary, are among the approximately 130 further linked entities involved in the proceedings.
CNBC obtained FTX’s 23-page bankruptcy filing, in which the company claims it has over 100,000 creditors, assets of $10-50 billion, and liabilities also in the $10-50 billion range. Lehman had about $600 billion in assets, while Enron had only $60 billion.
Bankman-Fried has also signaled his intention to name Stephen Neal as the new chairman of the board for the company. A spokesman, however, later stated that Neal would not be serving. Although he was flattered to be asked, he is unable to accept the post for reasons that have nothing to do with FTX., Inc. or its previous CEO.
For more information about FTX’s Chapter 11 filing, CNBC contacted Adam Landis, founding partner of Landis Rath & Cobb LLP. After reaching out to CNBC for comment, we did not immediately hear back.
The new CEO of FTX, Ray, has stated that Chapter 11 should be filed immediately to give the company time to examine its situation and create a plan for maximizing recoveries for stakeholders.
The FTX Group owns a number of important assets that may be managed most efficiently as a group effort. As Ray went on to say, “I want to assure each employee, customer, creditor, contract party, shareholder, investor, governmental authority, and other stakeholder that we will undertake this process with diligence, thoroughness, and transparency.”
Stakeholders, he said, should keep up with the rapid pace of events, recognize that the new team has been brought in very recently, and, for further details, check the record of the proceedings as it is updated in the coming days.
It’s the final nail in the coffin for one of the industry’s top names after a turbulent week.
When liquidity dried up, users requested withdrawals, and competing exchange Binance broke up its nonbinding deal to buy FTX, the company’s valuation plummeted from $32 billion to zero in a matter of days. On Thursday, FTX founder Bankman-Fried said he “f—-ed up.”
Bankman-Fried is a close friend and investor of Anthony Scaramucci, owner of SkyBridge Capital and former director of Trump’s communications. Scaramucci traveled to the Bahamas recently to lend a hand. A straightforward liquidity rescue seemed to be out of the question by the time Scaramucci arrived, he claims. At the time he and other investors were investigating FTX as a potential business partner, he claims he saw no indication of this mismanagement.
Scaramucci remarked on Friday morning’s episode of CNBC’s “Squawk Box,” “Duped I think is the correct term, but I am very sad since I do like Sam.” Since I was not a member of FTX’s inner circle, I cannot comment on what transpired.
CNBC has reached out to FTX for comment on this article and Scaramucci’s comments, but an FTX spokeswoman has not yet responded.
Quickly, FTX spread into non-crypto realms, such as mainstream entertainment. One such commercial featured comedian Larry David declining an offer to invest in cryptocurrency and aired during the last Super Bowl. I don’t think so. And I’m always spot-on with my predictions. Never.”
According to those in the know, GameStop is ending its FTX agreement. Under the terms of the September-announced partnership, GameStop sold FTX gift cards at limited locations, and FTX advertised GameStop on its exchange.
Following the FTX bankruptcy case, it is expected that the winding down of business agreements, such as the one with GameStop, would continue.
FTX Digital Markets Ltd., FTX Australia Pty Ltd., and FTX Express Pay Ltd. are not included in the Chapter 11 proceedings.