Embattled cryptocurrency exchange FTX has filed for bankruptcy in the US, seeking court protection as it looks for a way to return money to users.
The company said that former boss Sam Bankman-Fried had also stepped down as chief executive.
It said the goal was to “begin an orderly process to review and monetize assets for the benefit of all global stakeholders”.
The moves cap a week of huge turmoil for the company.
Earlier this week, customers rushed to withdraw their funds as rumours swirled that FTX and other firms headed by Mr Bankman-Fried were on shaky financial ground.
Mr Bankman-Fried tried to organize a bailout, hoping to be bought by Binance, a rival, and one of the world’s biggest cryptocurrency exchanges.
But Binance walked away from the deal, leaving FTX, an exchange used to buy and sell digital tokens, scrambling to raise billions of dollars.
“I’m sorry,” Mr Bankman-Fried wrote on Twitter on Thursday. “I… should have done better.”
The bankruptcy proceeding will involve FTX as well as Alameda Research, a trading firm founded by Mr Bankman-Fried, and roughly 130 affiliates, according to the statement FTX shared on Twitter.
Press Release pic.twitter.com/rgxq3QSBqm— FTX (@FTX_Official) November 11, 2022
John J Ray III, a lawyer who previously worked at a venture capital firm and has experience with bankruptcy, was named chief executive in Mr Bankman-Fried’s place.
“The FTX Group has valuable assets that can only be effectively administered in an organised, joint process,” Mr Ray said in the statement.
Prior to the meltdown,Mr Bankman-Fried had been one of the stars of the crypto scene, frequently speaking on behalf of the industry before regulators and considered a billionaire.
They say fortunes can be made and lost in “cryptoland” in the blink of an eye. But there’s not been a downfall quite like that of Sam Bankman-Fried.
Just months ago, the 30-year-old billionaire was being compared to the investment magnate Warren Buffett.
He was nicknamed the “King of Crypto” and not just surviving the tough crypto climate of 2022 but thriving.
In little over a week, his FTX empire has collapsed, plunging the wider cryptocurrency market into the doldrums once more with the value of coins tanking.
Mr Bankman-Fried admits that the downfall is “on me” but that will be scant consolation to the potentially 1.2 million FTX customers who could now lose their crypto savings.
All eyes will turn now to the other major cryptocurrency exchanges. With FTX, the second largest going under, pressure will be on the remaining companies to prove they have the financial strength to stay afloat.
