FTX files for bankruptcy, as financial crisis crashes founder’s networth to $0

One of the world’s biggest cryptocurrency exchanges, Futures Exchange (FTX), has filed for bankruptcy, as the wealth of the founder, Sam Bankman-Fried, crashed to zero.

FTX filed for the bankruptcy days after world’s largest crypto exchange, Binance, pulled out of an acquisition deal with the company, citing probe by US authorities and alleged misuse of customers funds as reason for not acquiring Bankman-Fried’s company.

The financial crisis in FTX came as a shock, as the company had bailed out crypto lender, BlockFi, with $250 million loan in June.

Also, the struggling crypto broker, Voyager Digital, had received almost $500 million loan from Futures Exchange a week before FTX bailout BlockFi.

The exchange took the bankruptcy path in order to begin an orderly process to review and monetise assets for the benefit of all global stakeholders.

Prior to the bankruptcy filing, FTX had recorded $627 billion volume of trades, with range of assets worth between $10 billion to $50 billion under its management.

READ ALSO:Elon Musk rejects $15bn offer from FTX’s Sam Bankman-Fried to co-buy Twitter

Within four years of its establishment, FTX has over 100,000 creditors. The firm’s growth, coupled with its parent company, Alameda Research, had shot Bankman-Fried to the billionaire’s list.

Due to the crypto winter, which is a long period of bearish run that often sees the value of crypto-asset fall, Bankman-Fried and FTX have not been able to grow their wealth and earnings respectively.

This has led to the networth of Bankman-Fried, the one time poster boy for the cryptocurrency industry, crashing from $16 billion to $0, according to Bloomberg.

The 30-year-old businessman has also resigned his position as Chief Executive Officer at FTX, and was replaced by American lawyer, John J Ray III, known to have overseen the liquidation of Enron in 2004.

Bankman-Fried said on Friday, “I’m piecing together all of the details, but I was shocked to see things unravel the way they did earlier this week.”

He added, “I will, soon, write up a more complete post on the play by play, but I want to make sure that I get it right when I do.”

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