Sam Bankman-Fried is out of the cryptocurrency exchange he founded and built into a powerhouse in just three years.
Sam Bankman-Fried has resigned as CEO of FTX, the cryptocurrency exchange he built into one of the largest in the world in just three years as it and its U.S. counterpart are forced into bankruptcy.
A year that began with a glitzy Super Bowl ad and $135 million naming rights deal to the Miami Heat’s arena ended with the collapse of the former billionaire and crypto wunderkind’s cryptocurrency empire in the space of little more than a week.
Along with FTX and FTX US, Bankman-Fried’s trading firm Alameda Research has also declared bankruptcy in the wake of reports that the second-largest global exchange loaned it as much as $10 billion, including customer funds that may not be recovered.
The collapse was a gut punch to the industry, both in its credibility in Washington, D.C., where it has been trying to convince lawmakers to build a light-touch regulatory regime for crypto, and financially, as it sent many tokens’ prices tumbling, with Bitcoin briefly dropping below $16,000.
In a Nov. 11 Twitter announcement, FTX Group’s new CEO, John J. Ray III, announced that the three firms and some 130 other affiliated companies have filed Chapter 11 bankruptcy “in order to begin an orderly process to review and monetize assets for the benefit of all global stakeholders.”
Warning that the new leadership team is still assessing the situation, Ray — who the New York Times said has experience in managing the collapse of Enron and subprime mortgage lender ResCap — ensured “every employee, customer, creditor, contract party, stockholder, investor, governmental authority and other stakeholder that we are going to conduct this effort with diligence, thoroughness and transparency.”
While FTX’s troubles began with a CoinDesk story that revealed that most of Alameda’s assets were FTT tokens issued by its sister exchange, it was only on Nov. 7 that their price collapsed, leading to a run on the exchange (valued at $32 billion at the beginning of the month) that left it insolvent. The exchange’s debts are reported to be as much as $8 billion. According to the Chapter 11 bankruptcy filing, Alameda Research’s liabilities could be between $10 billion and $50 billion.
It is a remarkably steep and fast fall for Bankman-Fried, who had made himself into the bushy-haired face of the crypto industry, both publicly and in Washington, D.C., where he led a lobbying blitz that, along with a promised $100 million in election campaign spending and fortune once estimated to be as large as $32 billion, made him one of its highest-profile figures.
Bankman-Fried had followed what has become the crypto insolvency playbook, written by collapsed firms including Celsius Network and Voyager Digital over the course of the year, first assuring the public that everything was alright before quickly running into far deeper trouble.
“I'm piecing together all of the details, but I was shocked to see things unravel the way they did earlier this week,” Bankman-Fried said on Twitter this morning, promising a full “play by play” of what happened shortly.
In the meantime, he said he hoped the bankruptcy filing in Delaware Chancery Court “is just step one: beginning to find ways to bring liquidity to users. That is the core thing that I am fighting for right now, and will continue to fight for in whatever ways I can.”
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