Categories: World

Crypto darling FTX files for bankruptcy as wunderkind CEO exits

London: Ailing crypto trading platform Crypto exchange FTX has filed for US bankruptcy protection and founder Sam Bankman-Fried has resigned as chief executive after the crypto industry’s biggest explosion sparked calls for tougher regulation.

FTX struggled to raise billions to avoid collapse as traders rushed to withdraw $6 billion (nearly $9 billion) from the platform in just 72 hours and rival exchange Binance exited a proposed bailout deal this week.

“I’m Really Sorry”: Sam Bankman-Fried.Credit:The Washington Post

FTX, its affiliated crypto trading firm Alameda Research, and about 130 of its other companies have entered voluntary Chapter 11 bankruptcy proceedings in Delaware, the company said in a statement on Twitter on Saturday AEDT.

It was an abrupt fall from favor for a company that was once a darling of the crypto industry. FTX raised $400 million from investors in January and valued the company at $32 billion. It attracted money from investors such as Singaporean state investor Temasek and the Ontario Teachers’ Pension Plan, as well as celebrities and sports stars.

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Bankman-Fried, 30, known for his signature shorts and t-shirt attire, has gone from being the poster child of crypto’s successes to the protagonist of the industry’s most notable crash.

A mining rig at a cryptocurrency mining farm in Arnhem, the Netherlands, on Thursday.Credit:Bloomberg

“The shock was that this man was the face of the crypto industry and it turned out that the emperor had no clothes on,” said Thomas Hayes, managing member at Great Hill Capital LLC in New York.

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The week’s turmoil hit already struggling cryptocurrency markets, sending bitcoin to its two-year low. Bitcoin fell after FTX’s announcement, falling 4.3 percent to $16,803 (U.S. time) Friday afternoon. Shares of cryptocurrency and blockchain-related companies also fell on the news. FTX’s token FTT fell 30 percent to $2.57 on Friday, with a weekly loss of 88 percent.

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