After a tumultuous week of back-and-forth with rival crypto exchange Binance, FTX has officially filed for bankruptcy protection in the U.S., with CEO and founder Sam Bankman-Fried resigning his role in sudden and unexpected downfall.
“I’m really sorry, again, that we ended up here,” Bankman-Fried wrote in a Twitter thread Friday. “Hopefully things can find a way to recover.”
Bankman-Fried said he will continue to “assist in an orderly transition,” while leaving John Ray III as the company’s new CEO.
“In the short term we have some long days and hard work ahead of us,” Ray told employees in a message verified by CoinDesk, referring to the bankruptcy filing as “the beginning of a path forward.”
The filings include FTX US as well as FTX’s crypto hedge fund Alameda and about 130 other sister companies.
Securities regulators in the Bahamas, where FTX.com is based, froze some of the company’s assets on Thursday. The Justice Department and Securities and Exchange Commission (SEC) are both investigating FTX.
FTX lent billions of dollars worth of customer assets to fund risky bets by Alameda, which now owes FTX $10 billion.
Binance, the only exchange worth more than FTX, was planning to acquire the company, causing Bankman-Fried to offer a public thanks to Binance CEO Changpeng Zhao.
However, after Binance began reviewing FTX’s internal data and loan commitments, the results led Binance to strongly lean against completing the transaction and then fully deserting it.
Katherine Wu, a crypto investor, tweeted on Tuesday that it was a “truly sickening news day- can’t even begin to assess the potential damage our industry will have to face.”
Bitcoin's price fell over $1,000 on news of the bankruptcy -- dropping to $16,500 within minutes. Ethereum prices also fell, as did the price of Solana, a cryptocurrency supported by FTX, which fell almost 20%.
FTX's investors, including Sequoia Capital, Lightspeed Venture Partners and SoftBank, will most likely lose most or all of their investments, reported The New York Times.
This is disturbing news for the crypto industry, with the unexpected plunge of one of its leaders. Bankman-Fried’s fortune, now gone, once totaled $25 billion. He was known to stand in and save struggling crypto companies and spent millions of dollars on endorsement deals with Tom Brady, Steph Curry, and the NBA’s Miami Heat.
It is uncertain how investors in FTX will reclaim their lost funds, what the repercussions will be for the industry as a whole, and what the future will hold for Sam Bankman-Fried, whose $16 billion fortune has fallen roughly 94% in days.