FTX is the latest in a series of cascading disasters that have shaken the crypto sector, now under intense pressure from collapsing prices and circling financial regulators. Its failure is also sending tsunami-like waves throughout the crypto universe.
The embattled cryptocurrency exchange, short billions of dollars, sought bankruptcy protection after the exchange experienced the crypto equivalent of a bank run. FTX, the hedge fund Alameda Research, and dozens of other affiliated companies filed a bankruptcy petition in Delaware on Friday morning. FTX US, which originally was not expected to be included in any financial rescue, was also part of the company’s bankruptcy filing.
FTX and Bankman-Fried, as well as his brother, were also early investors in Semafor, the high profile news startup run by former BuzzFeed editor-in-chief and New York Times columnist Ben Smith. In its bankruptcy filing, FTX listed more than 130 affiliated companies circled around the globe. The company valued its assets between $10 billion to $50 billion, with a similar estimate for its liabilities. The company appointed as its new CEO John Ray III, a long-time bankruptcy litigator who is best known for having to clean up the mess made after the collapse of Enron.
FTX had agreed earlier this week to sell itself to bigger rival Binance after experiencing the cryptocurrency equivalent of a bank run. Customers fled the exchange after becoming concerned about whether FTX had sufficient capital. On Thursday, the venture capital fund Sequoia Capital said Thursday it is writing down its total investment of nearly $215 million in FTX.
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