FTX Platform Adhered to US Bankruptcy Law Hitting Crypto Prices

One of the most important cryptocurrency exchanges falls under the protection of the bankruptcy law (Reuters)

the exchange FTX, whose insolvency problems led Bitcoin to hit its lowest value in two years this week, requested the protection of the bankruptcy law of the United States to try to organize the liquidation of its assets. The company, one of the world’s largest cryptocurrency exchanges, suspended mining last Tuesday and is seeking more than $9 billion in liquidity to try to return its users’ holdings. Sam Bankman FriedCEO and founder of the company, left his position.

In a statement made public through the social network Twitter, the company announced that it voluntarily initiated the procedures of “Chapter 11” of the US bankruptcy law to “initiate an orderly process of review and monetization of assets” in favor of its shareholders. In fact, it is a presentation towards the officialization of bankruptcy.

Immediately after the release was distributed, Bitcoin It fell more than 5% to trade around $16,500, near lows for the week.

The official statement
The official statement

“FTX Trading Ltd. (…) today announced that it, West Realm Shires Services Inc. (also known as US FTX), Alameda Research Ltd. and approximately 130 other affiliated companies (collectively, the “FTX Group”), have commenced a voluntary proceeding under Chapter 11 of the United States Bankruptcy Code in the District of Delaware for the purpose of initiating an orderly proceeding. to review and monetize assets for the benefit of all stakeholders globally,” the statement detailed.

One of the key details of the statement is that the US subsidiary of FTX is included in the bankruptcy proceedings. Until now, Bankman-Fried has ensured that the US business was oblivious to the problems of global FTX.

“John J. Ray III has been appointed CEO of the FTX Group. Sam Bankman-Fried has stepped down as CEO and will stay on to help with an orderly transition. Many FTX Group employees in various countries are expected to continue with the FTX Group and assist Mr. Ray and the independent professionals in their operations during the Chapter 11 proceeding,” added the released text.

“FTX Group has valuable assets that can only be effectively managed in an organized and joint process. I want to assure all employees, customers, creditors, contracting parties, shareholders, investors, government authorities and other interested parties that we will carry out this effort with diligence, rigor and transparency. Stakeholders need to understand that events have been rushed and the new team has only recently come on board. Interested parties should review the materials filed in the proceeding docket in the coming days for more information,” said Mr. Ray.

The announcements come days after its biggest rival, Binancebacked away from a takeover proposal, leaving it scrambling for some $9.4 billion from investors and rivals.

Alameda Research, which is also part of the bankruptcy protection, was partly behind FTX’s troubles and reportedly owes it some $10 billion, according to sources quoted by news outlets.

Sam Bankman-Fried resigned as CEO of FTX.  (Reuters)
Sam Bankman-Fried resigned as CEO of FTX. (Reuters)

The collapse of FTX marks a surprising reversal of fortunes for the company and its founder Sam Bankman-Fried, who until recently was part of the list of the world’s richest men with assets of around $17 billion.

It also raises questions about the future of smaller companies like BlockFi and bankrupt cryptocurrency lender Voyager Digital, who had signed rescue packages with FTX after TerraUSD’s spectacular crash in May brought many companies to the brink of collapse.

FTX was looking for a lifeline after a liquidity crisis due to clients withdrawing funds at a frantic pace. It also fuels concerns about the future of the cryptocurrency sector, which is facing an uphill task to win back the confidence of retail investors.

The filing of bankruptcy proceedings by the troubled exchange rocked the crypto market. As soon as it was known, Bitcoin fell to pierce $16,400 and, although it later experienced a rebound, it remains low on the day.

Ether, the crypto of the Ethereum protocol, loses almost 6% in the last 24 hours, Binance coin falls almost 2%, XRP falls 4.56% and Cardano sinks 6.77%, in an overall negative day for the crypto world .

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