Investors, who had bought cryptocurrencies there, will they find themselves with nothing? FTX, the main crypto trading platform, in turmoil for a week, announced on Friday that it was placed under the protection of American bankruptcy law.
“FTX Trading (…) and approximately 130 companies affiliated with FTX Group have started the voluntary procedure of chapter 11 (of the bankruptcy law)”, in order to “evaluate and monetize (their) assets”, announced FTX in a press release posted on its Twitter account.
Among the subsidiaries concerned, the two exchange platforms (the American branch and that for the whole world), as well as the investment fund Alameda Research, which had been launched by Sam Bankman-Fried before FTX.
Sam Bankman-Fried, head of the company, resigned. He is replaced by John J. Ray III, and “will remain to help with a smooth transition,” the statement said. “The Chapter 11 regime is appropriate to give FTX Group the opportunity to assess the situation and put in place a procedure to maximize the return on investment for investors,” said John J. Ray III.
Setbacks that plunge prices
The flashfall of FTX has stunned the cryptocurrency world: just over a week ago, the group was considered the second largest cryptocurrency platform in the world. But news reports revealed that his Alameda Research fund was investing in FTX-issued cryptoassets in a risky financial package.
FTX’s woes were accentuated by industry leader Binance, which offered to buy FTX on Tuesday before backing out on Wednesday. The announcement of the company’s bankruptcy placement further plunged the price of Bitcoin to nearly 16,000 euros, losing 5% on the day. It had reached its highest levels almost a year ago, at more than 55,000 euros.