FTX files for bankruptcy, founder and CEO Sam Bankman-Fried resigns

Sam Bankman-Fried (also known as SBF) has resigned as the CEO of the crypto exchange FTX Group. John J. Ray III has been appointed the new CEO effective immediately. The sudden announcement comes just a day after SBF warned FTX investors of bankruptcy without more capital.

In conjunction with Bankman-Fried’s resignation, the embattled FTX said it will initiate bankruptcy proceedings in the United States, further triggering what could be one of the biggest collapses in the industry. FTX Chapter 11 bankruptcy filing includes FTX US.

Just yesterday, Sam Bankman-Fried, who was once called the King of Crypto, told investors that the company is seeking emergency funding to meet withdrawal requests. Bankman-Fried added that FTX faces a liquidity shortfall of up to $8 billion, WSJ reported. The revelation came just hours after Binance backed out of the acquisition deal to rescue the company.

With the future of FTX now uncertain, FTX CEO Sam Bankman-Fried warned investors will be forced to file for bankruptcy if it doesn’t get the cash infusion, Bloomberg reported Wednesday. Bloomberg also added that the company exchange faces an $8 billion shortfall.

Press Release pic.twitter.com/rgxq3QSBqm

— FTX (@FTX_Official) November 11, 2022

Yesterday, the Wall Street Journal (WSJ) reported that Binance has walked away from the deal to acquire FTX. “Crypto exchange Binance said that it would walk away from an initial offer to acquire its competitor FTX after a review of the company’s structure and books, the crypto exchange said in a statement,” WSJ reported.

Meanwhile, investors have withdrawn at least $6 from FTX as the crypto exchange continues on the downward spiral, according to a report from Reuters, citing a message to staff by its CEO Sam Bankman-Fried. “On an average day, we have tens of millions of dollars of net in/outflows. Things were mostly average until this weekend, a few days ago,” Bankman-Fried wrote in the message.

Sam Bankan-Fried is currently under SEC investigation relating to the liquidity crisis and handling of customer funds. Bloomberg reported that US regulators are investigating whether FTX.com “properly handled customer funds,” as well as its relationship with other subsidiaries of Sam Bankman-Fried’s crypto empire.

Bankman-Fried founded FTX in 2019 with his co-founder Gary Wang. The Bahamas-based crypto exchange FTX offers derivatives products like futures and options as well as spot trading. Once an unknown startup, FTX has become a key player in the crypto space, rivaling the likes of Coinbase and Binance.

Sam graduated from the Massachusetts Institute of Technology (MIT) in 2013 at the age of 21. He was skilled in math and loved to solve problems and give back to society.