FTX, the crisis-struck cryptocurrency exchange, has filed for US bankruptcy protection after witnessing the digital currency equivalent of a bank run on Friday.
A week of several rumors over the platform’s financial worries sent Bitcoin to a two-year low this week, and the currency was trading at $16,861 (€16,256) by Friday evening.
FTX, its affiliated crypto trading firm Alameda Research, and almost 130 of its other companies have started voluntary bankruptcy proceedings (Chapter 11) in Delaware.
Chapter 11 is a US mechanism enabling a company to restructure its debts under supervision of court while continuing to operate. FTX Trading said it has about $10 billion to $50 billion in liabilities, $10 billion to $50 billion in assets, and over 100,000 creditors in its bankruptcy petition.
The platform’s founder and CEO, Sam Bankman-Fried, resigned after failing to raise billions to stave off collapse as traders hastened to withdraw $6 billion in just 72 hours.
A restructuring expert, John J. Ray III, has been appointed FTX’s new CEO. Reuters cited sources saying FTX struggled to raise about $9.4 billion from rivals and investors to save itself after customer withdrawals.