Cryptocurrency exchange FTX has filed for bankruptcy proceedings in the United States. The company filed after it was unable to cope with massive customer withdrawals.
The company’s chief executive, Sam Bankman-Fried, has resigned, but he says he will facilitate an orderly management transition.
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Restructuring specialist John J. Ray III will be the company’s new CEO. In particular, he dealt with the bankruptcy of the energy company Enron.
The bankruptcy filing includes the U.S. division of FTX, the Alameda trading firm, and about 130 other affiliated companies.
Chapter 11 bankruptcy (which usually involves reorganization to preserve the business and allow it to continue operating) will allow FTX Group to assess the situation and develop a plan to “maximize damages to stakeholders.”
The company has “valuable assets that can only be effectively managed in an organized manner,” Ray said.
Background. Despite the rapid evolution of blockchain technology and the rise of Decentralized Finance, the crypto market remains on shaky ground. FTX’s liquidity problems started in early November 2022. To cope with the crisis, Bankman-Fried has been trying to find between $6 billion and $8 billion in recent days, writes the FT.
The founder also tried to negotiate with Binance, which was supposed to help the project and could buy it out.
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But after checking the news about the misappropriation of customer funds and possible investigations against the company in the US, the crypto exchange refused to buy the non-US business of FTX.
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