FTX has filed for Chapter 11 bankruptcy protection and Sam Bankman-Fried has stepped down as the crypto exchange’s CEO. John J.Ray is now the beleaguered company’s new chief executive. He said Chapter 11 is appropriate to provide the FTX Group the opportunity to assess its situation and develop a process to maximize recoveries for stakeholders.
FTX’s U.S operations and its trading firm Alameda Research are included in the bankruptcy filing. Alameda Research is also subjected to a federal investigation. Moreover, the Securities and Exchange Commission (SEC) is trying to establish if employees at Alameda used FTX customer funds to place risky bets on the market.
Sam Bankman-Fried’s company has more than 100,000 creditors, assets ranging from $10 billion to $50 billion, and liabilities in the range of $10 billion to $50 billion. Ray said FTX Group has valuable assets that can only be effectively administered in an organized, joint process. He wants to ensure every employee, customer, creditor, contract party, stockholder, investor, governmental authority, and other stakeholder that FTX will conduct this effort with diligence, thoroughness, and transparency. Ray believes that stakeholders should understand that events have been fast-moving. The new team has come in only recently and they will review the materials filed on the docket of the proceedings over the coming days for more information.
Anthony Scaramucci, the founder of SkyBridge Capital who is Bankman-Fried’s friend, said the FTX case is beyond the point of a simple liquidity rescue. He shared that there was no evidence of mishandling when he and other investors first screened the crypto exchange as a potential business partner. Scaramucci expressed disappointment.