FTX CEO steps down as exchange files for bankruptcy

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Updated November 14, 2022 | Published November 14, 2022

2 mins read

Cryptocurrency exchange FTX has filed for bankruptcy after Binance backed out of rescue deal.

Crypto markets are in turmoil after beleaguered cryptocurrency exchange FTX filed for US bankruptcy under Chapter 11 on Friday.

This prompted yet another industry-wide rout with the company’s CEO Sam Bankman-Fried stepping down from his position and admitting that he had “messed up”.

These developments coincide with Binance’s decision to back out of a deal to buy out FTX over the launch of investigations by the Department of Justice and the US Securities and Exchange Commission into the company.

Trouble started with a realization that FTX was affiliated with Alameda Research, a crypto trading company owned by Bankman-Fried, which used FTX customer funds to continue operation.

This has suppressed FTX’s own liquidity, making it harder to operate, although customer funds have not been discussed openly in most of the current reporting.

Industry experts are uncertain about what the collapse of FTX will mean for the industry, but it’s certainly not likely to be good.

Great Hill Capital LLC managing member Thomas Hayes said that cryptocurrency is likely to start “finding the bottom” in the coming days.

“The shock was that this guy was the face of the crypto industry, and it turned out that the emperor had no clothes”, Hayes noted.

Bankman-Fried was indeed a venerated character in the industry, more so than Changpeng Zhao, Binance’s chief executive, who was often seen as brash, but his FTX homologue was a man of stature and tacit inspiration.

In fact, Bankman-Fried was even dubbed a “savior” of the crypto industry after he offered to buy a number of bankrupted companies earlier in 2022 in a bid to save user funds.

He would have retained this public image had it not been for his decision to use funds from FTX to run Alameda Research.

Cryptocurrencies are indeed taking a pretty big hit even now. But the ripple effects across the industry remain to be seen.

It is also unclear how regulators will react to this development, which now involves one of the biggest entities in the industry that does not have a clean track record with authorities in the first place.

Looking for your next crypto casino? Check out: Bitcasino, Gamb.co or FortuneJack.

Written by Alex

Reporter

Alex is a well-rounded crypto writer who focuses on general market and legal developments. His main interest lies in how crypto gaming can become a more permanent part of the gaming landscape and how blockchain holds benefits to players they are not even aware of.
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