FTX.com, FTX US, Alameda Research, and approximately 130 companies affiliated with FTX’s corporate arm have begun the bankruptcy process.
There’s a lot going on at FTX and none of it is good.
Founder and CEO Sam Bankman-Fried has stepped down from his post, all of his companies — including FTX.com, FTX US, and Alameda Research — have filed for bankruptcy, and about 130 companies affiliated with FTX have also begun the bankruptcy process.
Bankman-Fried’s resignation comes as his cryptocurrency exchange, which was once the fourth-largest, has been under fire. Amid a liquidity crunch, the largest crypto exchange, Binance, signed a letter of intent to acquire FTX.com on Tuesday to save it from its troubles. That deal fell apart a day after Binance looked at FTX’s financial books and came across reports regarding mishandled customer funds and alleged US agency investigations.
Some of that mishandling includes Bankman-Fried transferring nearly $10 million of FTX’s native token, FTT, to his principal trading firm, Alameda Research. FTX and Alameda merged their venture capital operations in August, further tying the two Bankman-Fried-led companies together.
When the Binance acquisition deal was on the table, FTX assured consumers more than once that its US operations would be unaffected by the changes. Bankman-Fried even repeated this on Thursday in a string of tweets he published apologizing for his company’s fall from grace.
Bankman-Fried will remain at FTX in some capacity to help the company transition, but it’s unclear what his new role will be. Corporate turnaround expert John J. Ray III has taken over as CEO of FTX, the corporate arm that oversees FTX.com, FTX-US, and Alameda. His first order of business is guiding FTX through a process to review and monetize assets for stakeholders.
“I want to ensure every employee, customer, creditor, contract party, stockholder, investor, governmental authority, and other stakeholder that we are going to conduct this effort with diligence, thoroughness, and transparency,” Ray said in a press release. “Stakeholders should understand that events have been fast-moving and the new team is engaged only recently.”
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In a new thread of tweets Friday, Bankman-Fried again expressed his regret for FTX’s current state and said he’d provide a deeper dive into what really happened with the company at a later date.
“I’m really sorry, again, that we ended up here. Hopefully things can find a way to recover,” Bankman-Fried said in a tweet. “Hopefully this can bring some amount of transparency, trust, and governance to them. Ultimately hopefully it can be better for customers.”
The crypto community is voicing plenty of anger and disappointment with Bankman-Fried.
If FTX’s downfall isn’t bizarre enough, Coindesk reported that Bankman-Fried ran his tumbling empire from a penthouse in the Bahamas, where nine executives from his companies also reside. At some point, individuals in the group were involved in romantic relationships with one another. Most notably, sources told Coindesk that Alameda CEO Caroline Ellison dated Bankman-Fried.
“Some employees kept their life savings on FTX,” an anonymous FTX employee told CoinDesk. “We trusted that everything was fine.”
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