Cryptocurrency firm FTX on Friday announced that it has filed for bankruptcy in the United States. The world’s second-largest cryptocurrency firm also said that its Chief Executive Officer Sam Bankman-Fried has stepped down. He will be replaced by John Ray.
“FTX Group has commenced voluntary proceedings under Chapter 11 of the United States Bankruptcy Code in the District of Delaware in order to begin an orderly process to review and monetise assets for the benefit of all global stakeholders,” the company said in a statement.
Chapter 11 of the United States Bankruptcy Code allows a company to restructure its debts under the supervision of the court while continuing operations.
The development came after cryptocurrency platform Binance agreed to buy FTX on Wednesday, but backed down a day later.
Binance had said that it aborted the deal after it was made aware of the mishandling of customer funds and alleged investigations by United States agencies against FTX.
On Friday, Ray said that filing for bankruptcy will give FTX an opportunity to asses its situation and maximise recoveries for stakeholders.
“The FTX Group has valuable assets that can only be effectively administered in an organised and join process,” he said. “I want to ensure every employee, customer, creditor, contract party, stockholder, investor, and governmental authority that we are going to conduct this effort with diligence, thoroughness and transparency.”
The announcement also led to a drop in shares of cryptocurrency and blockchain-related firms on Friday.
Shares of Silvergate Capital, a leading bank in fintech and cryptocurrency, dropped by declined by 10%, while bitcoin holder MicroStrategy Incorporation slipped 2.6%.
The value of Bitcoin also fell by 3.6% to $16,919 (or Rs 13,62,794), according to Reuters.