Cryptocurrency exchange FTX has filed for Chapter 11 bankruptcy in the U.S., the company posted on Twitter. Sam Bankman-Fried has also stepped down as CEO and has been replaced by John J. Ray III.
Alameda Research, Bankman-Fried’s crypto trading firm, and approximately 130 additional affiliated companies are part of the bankruptcy protection.
“The immediate relief of Chapter 11 is appropriate to provide the FTX Group the opportunity to assess its situation and develop a process to maximize recoveries for stakeholders,” said Ray in a statement. “The FTX Group has valuable assets that can only be effectively administered in an organized, joint process.”
The new CEO noted that the transition will be “with diligence, thoroughness and transparency.”
One of cryptocurrency’s main figures, Bankman-Fried will assist with the transition.
According to Reuters the news could trigger what could be one of the biggest meltdowns in the crypto industry.
FTX went from a $32 billion valuation to bankruptcy in a few days. The announcement comes days after larger rival Binance walked away from a proposed acquisition, raising alarms among investors. FTX was seeking a lifeline after a liquidity crunch due to customers withdrawing funds.
The Chapter 11 proceedings exclude the following subsidiaries: LedgerX LLC, FTX Digital Markets Ltd., FTX Australia Pty Ltd., and FTX Express Pay Ltd.