FTX has filed for Chapter 11 bankruptcy.
The move includes FTX US, the group’s American subsidiary, which up to yesterday was believed to be solvent and able to keep running despite the international arm’s issues.
The company’s official Twitter account posted a press release on Friday morning detailing the decision, which also includes a resignation by CEO Sam Bankman-Fried.
SBF had been on the spotlight for a couple of years, amassing great media coverage as he led what became known as the FTX Empire. The name alluded to the many companies under the FTX umbrella, including Alameda Research, a quantitative trading firm founded by SBF.
Alameda is actually on the center of the issues that led to FTX’s downfall. A leaked balance sheet of the trading firm sparked doubts in the industry, culminating in one of the largest holders of FTX’s native crypto token, FTT, announcing they’d be offloading their position.
Binance CEO CZ’s tweet sparked a feud with SBF, who said, in a since-deleted tweet, that FTX was fine and assets held by the company were as well. Soon after, however, an acquisition deal between Binance and FTX came to light, with SBF then conceding to a “liquidity crunch.”
The bailout sparked optimism in the industry. However, CZ made it clear from the start that Binance could walk away from the deal “at any time.” Notably, the company had yet to perform due diligence by analyzing FTX’s financial books in order to decide whether to move forward with the acquisition.
After reviewing the financial condition of FTX, Binance officially decided to not purchase the non-U.S. business operations of FTX.
In addition to the liquidity issues, the revelations made this week led to several U.S. regulators opening investigations into FTX, while others broadened their probes.
It’s uncertain how long FTX customers will have to wait to get their bitcoin funds back, or whether that will ever fully happen.
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