Key Takeaways:
- FTX will now be led by John J. Ray III.
- FTX has more than 100,000 creditors, according to its legal filing.
LAGOS (CoinChapter.com) — Embattled FTX founder Sam Bankman-Fried has resigned from his position as the Chief Executive Officer of the company capping a catastrophic week of corporate drama that has upended the entire crypto market and sent shock waves through the industry.
Bankman-Fried through his official Twitter handle announced his resignation on Friday. He further announced the appointment of John J. Ray III, a corporate turnaround specialist, as the new CEO of the company.
He also indicated his wishes to appoint Stephen Neal as the company’s new chairman of the board. The 30-year-old founder of the exchange also pointed out that he will remain to assist in an orderly transition.
“I’m really sorry, again, that we ended up here. […] This doesn’t necessarily have to mean the end for the companies or their ability to provide value and funds to their customers chiefly, and can be consistent with other routes. Ultimately I’m optimistic that Mr. Ray and others can help provide whatever is best. I’m going to work on giving clarity on where things are in terms of user recovery ASAP.”
Sam Bankman-Fried said.
Notably, this development marks the end of FTX’s chapter under the leadership of Bankman-Fried. Bankman-Fried some days ago was regarded as one of the most respected people in the crypto world. It is however not clear what comes next for him but he has hired renowned attorney Martin Flumenbaum for legal representation.
FTX Files For Bankruptcy Protection
The very apologetic Bankman-Fried further disclosed that FTX Trading has filed for Chapter 11 bankruptcy. In the 23-page bankruptcy filing, FTX disclosed that it has more than 100,000 creditors, assets in the range of $10 billion to $50 billion, and liabilities in the range of $10 billion to $50 billion.
The bankruptcy filing has 130 additional affiliated companies including FTX’s US operations and its trading subsidiary, Alameda Research. It is worth noting that these companies are currently the target of a federal investigation. The SEC is trying to determine if employees at Alameda used FTX customer funds to place bets on the market.
Ray in a statement noted that the bankruptcy protection will give FTX the chance to assess its situation and develop a process to maximize recoveries for stakeholders. He said:
“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 stakeholder that we are going to conduct this effort with diligence, thoroughness and transparency.”
Additionally, FTX is the third crypto company to apply for bankruptcy protection this year. Recall that crypto behemoth Voyager Digital and Celsius Network filed for bankruptcy protection in July following Terra collapse. The filing also clouds the fate of crypto lender BlockFi which FTX helped bail out with $400 million this year.
Furthermore, FTX’s collapse has also destabilized the crypto industry, which was still recovering from May crash that drained $1 trillion from the market. Notably, on the day prices of the leading cryptocurrencies including Bitcoin and Ether have plummeted.
Who Is John J. Ray III?
John J. Ray III is a restructuring expert who oversaw the liquidation of Enron after the collapse of its business in 2001. He also helped liquidate the trust of the subprime mortgage company ResCap following its 2012 bankruptcy.
However, there might be a gray side to the new FTX CEO as reports have emerged claiming John J. Ray III is registered by SEC for insider trading. Ray according to the report is registered with the charges on account of lack of financial disclosures while being in responsible positions.
The report indicated that the new FTX CEO traded stocks while holding roles requiring financial disclosures. However, Ray has garnered a reputation for having something of a Midas touch with troubled companies. Investors are currently hoping he can recreate previous success and turn FTX’s current situation around.
