Cryptocurrency exchange FTX says it has started the process of for Chapter 11 bankruptcy in the US, and that founder Sam Bankman-Fried is stepping down as CEO.
Bankman-Fried is being replaced by John J Ray, who says: “The immediate relief of Chapter 11 is appropriate to provide FTX Group the opportunity to assess its situation and develop a process to maximise recoveries for stakeholders.”
Bankman-Fried has been scrambling to find a rescue package for his firm over the last week as it faced up to a liquidity crunch as customers rushed to withdraw funds,
The company struck a takeover deal with rival Binance but that quickly fell through when due diligence showed up a massive financial black hole. In the days since, it has been trying to raise more than $9 billion from investors.
FTX is also facing regulatory heat, with the SEC and CFTC both investigating it in the US. Today it emerged that FTX Europe is set to have its licence suspended, while FTX Japan was yesterday ordered to suspend its operations.
News of the filing sent crypto prices spiralling, with bitcoin plunging by more than five per cent in a matter of minutes.