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Beleaguered cryptocurrency exchange FTX, its U.S. subsidiary FTX US and its sister firm Alameda Research on Friday filed for Chapter 11 bankruptcy in a United States court.
The stunning development comes as industry participants watched for Tron founder Justin Sun to potentially bail out the ailing exchange.
Hours earlier, Sun said he has entered into negotiations with FTX after Changpeng Zhao, CEO of Binance, walked away from the deal a deal to acquire the Bahamas-based FTX exchange.
When asked by Bloomberg if Tron has the resources to rescue FTX from going bankrupt, Sun said the company is ready to cover losses once it finishes doing its own due diligence.
“I don’t have an exact number, but on our side, we know the concept, and I think at this kind of level there is something on the table here,” Sun had said.
FTX’s Bankruptcy Announcement: In a press release shared on Twitter, FTX stated that bankruptcy proceedings were initiated to “begin an orderly process to review and monetize assets for benefit of global stakeholders.”
The company also announced that its founder and CEO Sam Bankman-Fried will resign from his position and John J. Ray III will be appointed as the new chief executive.
Bankman-Fried will however remain “to assist in an orderly transition.”
“Many employees of the FTX Group in various countries are expected to continue with the FTX Group and assist Mr. Ray and independent professionals in its operations during the Chapter 11 proceedings,” the statement said.
Ray said the immediate relief of Chapter 11 is to provide the FTX Group the opportunity to assess its situation and develop a process to maximize recoveries for stakeholders.
“The FTX Group has valuable assets that can only be effectively administered in an organized, joint process. I want to ensure every employee, customer, creditor, contract party, stockholder, investor, governmental authority and other stakeholders that we are going to conduct this effort with diligence, thoroughness and transparency,” he said.
“Stakeholders should understand that events have been fast-moving and the new team is engaged only recently. Stakeholders should review the materials filed on the docket of the proceedings over the coming days for more information,” the new CEO added.
Benzinga has reached out to Bankman-Fried and Tron founder Sun for comment.
Cryptocurrency Market Pulls Back: Following FTX’s announcement, crypto markets nosedived into the red as jittery investors remain uncertain over the fate of billions of dollars in customer funds that FTX held.
Bitcoin BTC/USD is trading down more than 3% at $16,850 levels.
The world’s second-largest cryptocurrency, Ethereum ETH/USD, is down by around 3% on Friday at around $1,260 levels.
Tron TRX/USD plummeted 3.5% at 0.056 and FTX Token FTT/USD dived 25% to $2.72.
Interestingly, Solana SOL/USD is trading flat at the $16.70 level.
The broader financial markets remained comparatively unfazed by the development.
The Dow Jones is trading down 0.3% at 33,610 levels, the Nasdaq is up 0.4% at 11,160 levels and the S&P 500 is up 0.2% at 3,960 levels.
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Image and article originally from www.benzinga.com. Read the original article here.