After days of uncertainty and confusion, FTX cryptocurrency announced on Friday that it has filed for bankruptcy. FTX based in the Bahamas published the announcement as a press release on Twitter. The announcement was made by FTX Trading Limited which is doing business as FTX.com.
According to a press release West Realm Shires Services Inc. (doing business as FTX US), Alameda Research Ltd., and approximately 130 additional affiliated companies (together, the “FTX Group”), have commenced voluntary proceedings under Chapter 11 of the United States Bankruptcy Code in the District of Delaware.
With the commencement of bankruptcy proceedings, authorities and FTX will now begin to review the assets owned by the entity and monetize them. Stakeholders from around the globe can claim their share of the monetized assets.
Sam Bankman-Fried who is the founder and CEO of FTX and FTX US has resigned from the position of Chief Executive Officer. John J. Ray III has been appointed as chief executive officer of FTX and will head the company during bankruptcy proceedings and monetization of assets.
Press Release stated that Sam Bankman-Fried and other employees of the FTX Group will continue to be part of the company and help the top management in completing the legal proceedings and final operations. According to chapter 11 proceedings, various independent professionals will also be part of the operation.
John J Ray said that immediate relief under chapter 11 will give FTX enough time to analyze the current financial situation and hence formulate a process that can maximize recovery for stakeholders in various countries. He also said that the company has valuable assets that can only be effectively administered in an organized, joint process. Mr. Ray ensured every employee, customer, creditor, contract party, stockholder, investor, governmental authority, and other stakeholder that FTX is going to conduct this effort with diligence, thoroughness, and transparency.
He also asked stakeholders to keep themselves updated about the bankruptcy proceedings by utilizing information available privately and publicly.
Some subsidiaries to stay
Through the press release, FTX Group also announced that some subsidiaries, namely, LedgerX LLC, FTX Digital Markets Ltd., FTX Australia Pty Ltd., and FTX Express Pay Ltd will not be included in the Chapter 11 proceedings.
FTX liquidity crisis
FTX which was founded in 2017 has been facing a liquidity crunch for the past few days. The tumbling down of FTT (FTX online token) and large-scale withdrawals put the liquidity of the company at an alarming level.
Reports suggest that the company decided to file for bankruptcy as efforts to inject more funds into the crypto exchange failed terribly.
