May 23, 2024

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The latest news about the bankruptcy of FTX, BlockFi and more

The latest news about the bankruptcy of FTX, BlockFi and more

FTX, one of the largest companies in the world Cryptocurrency The stock exchanges, which collapsed at an astonishing speed this month.

The deposit run left the company owing clients $8 billion, setting off a chain of events that rocked the cryptocurrency world and spearheaded investigations by the Securities and Exchange Commission and the Department of Justice.

This time last month, the $32 billion cryptocurrency firm managed billions of dollars in client assets; Now, FTX can owe money to it more than a million people and organizations.

Just three weeks ago, Sam Bankman-Fried, founder and CEO of FTX and figure at the heart of the crisis, was trying to reassure his clients. “FTX is fine,” he said Wrote on Twitter. “Originals are good.” The next day, Mr. Bankman Fried announce His plan is to sell FTX to Binance, a competing cryptocurrency exchange.

Within days, Binance pulled out of the deal, FTX filed for bankruptcy, and Mr. Bankman-Fried, once a superstar in the crypto world, tendered his resignation.

Here are the latest developments regarding the crisis:

On November 22, a new chapter for FTX began as it began bankruptcy procedures In federal court in Delaware.

“A significant amount of assets have either been stolen or are missing,” said James Bromley, a partner at the law firm Sullivan & Cromwell representing FTX.

The bankruptcy case involves more than 100 companies and could affect more than 1 million creditors.

Mr. Bankman Fried, 30, was Replacing the position of CEO of FTX Corporation This month by John Jay Ray III, a veteran of corporate turnarounds including the Enron bankruptcy proceedings. Mr. Ray wrote in an acrimonious lawsuit in US bankruptcy court for the District of Delaware that he had never faced such a complete failure of corporate control.

“This situation is unprecedented,” Mr. Ray added in the filing.

FTX’s implosion sent shock waves through the cryptocurrency and financial communities. Many Funds and startups in the crypto space It was intertwined with FTX, extending the lifeline to other companies after Crypto market crash in spring.

Crypto-asset prices fell on Monday, and Bitcoin dropped.

On Monday, BlockFi, a cryptocurrency lender and financial services firm with close ties to FTX, Filed bankruptcy. BlockFi suspended draws this month, explained that she has “significant exposure” to FTX.

Genesis Global Capitala crypto lender that was a business partner with FTX, he told his clients This month withdrawals will be halted due to liquidity issues.

Genesis then hired a restructuring consultant as it explores options including possible bankruptcy. About $175 million of its assets were in FTX when the exchange froze the accounts.

Mr. Freed Bankman faces investigations by the Securities and Exchange Commission and the Department of Justice. They will hing on the question of whether FTX illegally lent clients money to Alameda Research, a cryptocurrency hedge fund also founded by Mr. Bankman-Fred.

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“It’s somewhere between being, on the one hand, an extraordinary offense, and at the same time being just the most ridiculous and an extraordinary failure of basic controls,” said Eugene Soltis, an expert on corporate integrity at Harvard Business School. He added that if a traditional brokerage firm were accused of using client money in a similar way, “there would be FBI agents walking the halls picking up documents and computers.”

In the courtroom last week, FTX attorneys did not spare Mr. Bankman-Fried. “The Emperor was not dressed,” Mr. Bromley He saidadding that Mr. Bankman-Fred ran FTX as a “personal fief”.

Before his fall, Mr. Bankman Fried was a senior member of the effective altruism Society, a movement dedicated to maximizing the impact of donations that is popular in Silicon Valley.

Mr. Bankman Fried also donated to Politician Causes and Candidates. gave it up $40 million to federal campaigns and committees that primarily supported Democrats in the months leading up to the 2022 election, according to Federal Election Commission records. These efforts made him the party’s second largest donor, after George Soros, the billionaire billionaire.

More than 80 investors have pumped nearly $2 billion In the company for two years, they often agree to invest in the bustling company with little oversight. No investor has sat on FTX’s board of directors, and FTX has not told investors about the nature of its relationship with Alameda Research.

FTX’s investors have included powerful and well-known companies including Sequoia Capital, SoftBank, and BlackRock. Sequoia, published by A glowing Mr. Bankman Fried on his site this year, I apologize to its limited partners for its investment in FTX, which it is now Value At $0.

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Caroline Ellison, who served as CEO of Alameda Research, is a key figure in the FTX fallout as well. The week FTX and Alameda broke up, Ms. Ellison he told the staff that her company was sucked into FTX clients’ money.

Ms. Ellison, 28, is a Stanford graduate who was sometimes romantically involved with Mr. Bankman-Fried, and lived in a residence in the Bahamas with nine roommates including Mr. Bankman-Fried and other senior FTX executives.