FTX Trading Limited on Friday, Nov. 11, announced that it is going to file for bankruptcy and that Samuel Bankman-Fried is resigning as CEO. This was after the company failed to source enough capital to stay afloat.
Bankman-Fried has been succeeded by John J. Ray III, though the outgoing chief will stay on to assist with the transition.
"The immediate relief of Chapter 11 is appropriate to provide the FTX Group the opportunity to assess its situation and develop a process to maximize recoveries for stakeholders," Ray said in the statement.
The move rippled through some 130 FTX-related companies, including large global crypto exchange FTX.com and FTX.US.
The Ontario Teachers' Pension Plan has managed hundreds of billions of dollars in assets for nearly 200,000 education workers, holding stakes in traditional investments from airports to shopping centers. They have been recently warned in a statement that the fund had sunk as much as $75 million into FTX in a financing round last year.
"This could be a very significant event for a lot of investors, especially retail investors," said former chief economist of the Securities and Exchange Commission Chester Spatt, noting the struggle many customers would face to get their money out in a bankruptcy.
Bankman-Fried offered little information on when or if FTX customers will find relief. "I'm going to work on giving clarity on where things are in terms of user recovery ASAP. Hopefully things can find a way to recover. Hopefully, this can bring some amount of transparency, trust, and governance to them. Ultimately, hopefully, it can be better for customers" Bankman-Fried said in a series of tweets, which received skeptical replies from netizens.
The crypto sector has been long-standing on shaky ground. In June, embattled digital bank Celsius Network froze customer withdrawals, leaving scores of depositors without access to their accounts. The company filed for bankruptcy a month later and many users still can't access their funds.
Founded in 2019, FTX grew as the Wuhan coronavirus (COVID-19) boomed the crypto industry in 2020 and 2021 and eventually reached a $32 billion valuation earlier this year. It's all gone now.
One of its financiers, venture firm Sequoia Capital, has already marked down its $210 million investment to zero dollars.
Meanwhile, its professional sports franchise has already broken ties with the firm. Miami-Dade County and the Miami Heat said they were terminating the naming-rights deal immediately for the club's FTX Arena and would be seeking a new partner.
FTX has been operating a huge digital Ponzi scheme
Crypto Nostradamus John Perez told Health Ranger Mike Adams during a recent episode of the "Health Ranger Report" podcast that the digital currency bitcoin has collapsed and lost 25 percent of its value or currently around $16,500, down from a level of $20,000 just a week ago.
Adams cited FTX, which has been operating a huge digital Ponzi scheme and just filed for bankruptcy.
Bankman-Fried could potentially face criminal investigations and prosecutions. Adams said Bankman-Fried took depositors' crypto money and then use that to make riskier bets on other platforms or with other vehicles. But the bets turned against them because the stock market is falling, interest rates are rising and housing bubbles are bursting.
"Now, FTX has a shortfall of $8 billion in withdrawal requests and needs emergency funding. And now, it appears FTX is worth zero as of this moment," Adams said.
Meanwhile, Binance, a separate cryptocurrency exchange, announced on November 9 that it will not push through with the acquisition of FTX "as a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged U.S. agency investigations." (Related: Binance backs out of bailout plan to rescue FTX, causing further turmoil across crypto markets.)
According to a Reuters article, Binance was helping Iranian firms in trading $8 billion despite the sanctions placed to cut Iran off from the global financial system. Perez opined that maybe the reason why the Binance is no longer acquiring FTX is that the Department of Justice (DOJ) is already conducting investigations.
"It's over. So CZ [Changpeng Zhao], the CEO of Binance looked at FTX and said, 'Dude, I'm gone. I'm at the DOJ right now answering questions. You want me to take you over, not going to happen,'" Perez said.
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