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Cryptocurrency firm FTX Trading, a major digital asset exchange, has filed for bankruptcy and its billionaire founder, Sam Bankman-Fried, has stepped down as chief executive, the company announced on Friday.
“I’m so sorry, again, that we ended up here,” Bankman-Fried said in a tweet thread Friday. “Hopefully things can find a way to recover.”
FTX Trading and its subsidiary FTX US, as well as Bankman-Fried itself, have been under investigation by the Texas State Securities Board since early October on whether the company offers unregistered securities to Texans through its yield cryptocurrency accounts. The company is not registered to sell securities in Texas, but said it believed it was operating legally because there was an “active license application pending”.
From the company collapse came after Changpeng Zhao, the CEO of cryptocurrency rival Binance, questioned the viability of FTX and refused to take over the company under a bailout deal offered by Bankman-Fried. Investors rushed to cash out their deposits and the company couldn’t handle the influx of cashouts, according to multiple reports.
The Delaware bankruptcy filing – which includes FTX Trading, FTX US, Alameda Research and approximately 130 other affiliates collectively known as the FTX Group – is intended to allow the group “to assess its situation and develop a process to maximize recoveries for stakeholders”. FTX Group’s new CEO, John J. Ray III said in a statement.
A Bloomberg report On Friday, Bankman-Fried’s assets went “from $16 billion to zero in days” following the “fall of his crypto empire.” By March, according to the report, its assets had reached $26 billion.
Bankman-Fried was a major supporter of Texas gubernatorial candidate Beto O’Rourke anddonated $1 million to Democratscampaign in the quarter leading up to Tuesday’s election. O’Rourke lost his race to overthrow Republican Governor Greg Abbott.
Several subsidiaries of FTX – LedgerX LLC, FTX Digital Markets Ltd., FTX Australia Pty Ltd. and FTX Express Pay Ltd – are not included in the bankruptcy proceedings.
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