Crypto Company that Faces Scrutiny Files for Bankruptcy
By Karen Brooks Harper, The Texas Tribune
The cryptocurrency firm FTX Trading, a major digital asset exchange, has filed for bankruptcy and its billionaire founder, Sam Bankman-Fried, has resigned as chief executive officer, the company announced on Friday.
“I'm really sorry, again, that we ended up here,” Bankman-Fried said in a Tweet thread on Friday. “Hopefully things can find a way to recover.”
FTX Trading and affiliate FTX US, along with Bankman-Fried himself, have been under investigation by the Texas State Securities Board since early October over whether the company is offering unregistered securities to Texans through its yield-bearing cryptocurrency accounts. The company is not registered to sell securities in Texas but has said that it believes it is operating legally because there is an “active application for a license which has been pending.”
The company’s collapse came after Changpeng Zhao, the CEO of cryptocurrency rival Binance, questioned FTX’s viability and declined to buy out the company in a bailout deal offered by Bankman-Fried. Investors raced to cash out their deposits and the company couldn’t handle the influx of cash-outs, according to several reports.
The bankruptcy filing in Delaware — which includes FTX Trading, FTX US, Alameda Research and about 130 additional affiliated companies collectively known as the FTX Group — seeks to allow the group to “assess its situation and develop a process to maximize recoveries for stakeholders,” newly-appointed FTX Group CEO John J . Ray III said in a statement.
A Bloomberg report on Friday said Bankman-Fried’s assets went “from $16 billion to zero in days” as a result of the “downfall of his crypto empire.” In March, the report said, his assets had reached $26 billion.
Bankman-Fried was a major supporter of Texas gubernatorial candidate Beto O'Rourke and donated $1 million to the Democrat's campaign in the quarter before Tuesday's election. O’Rourke lost his race to unseat Republican Gov. Greg Abbott.
Several FTX subsidiaries — LedgerX LLC, FTX Digital Markets Ltd., FTX Australia Pty Ltd. and FTX Express Pay Ltd — are not included in the bankruptcy proceedings.
This article originally appeared in The Texas Tribune at https://www.texastribune.org/2022/11/11/ftx-trading-ceo-sam-bankman-fried/.
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