FTX and Alameda Research Collapse and File for Bankruptcy, SBF Resigns
On Friday, one of the world’s largest crypto exchanges, FTX, announced that it had filed for Chapter 11 bankruptcy along with its sister entity Alameda Research and approximately 130 other companies related to FTX.
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The company also announced that founder Sam Bankman-Fried was resigning from his position as CEO, with John J. Ray III succeeding him.
"It’s scary to think that FTX, which is one of the largest crypto exchanges in the world, was bitten by liquidity concerns," Dan Raju, CEO of brokerage platform Tradier told me.
FTX faces almost $8.8 billion in liabilities, and it was revealed that Bankman-Fried's Alameda Research relied on FTX's native token (FTT), Robinhood shares and client funds from FTX to prop up the trading firm.
"While it is easy to measure retail confidence in terms of coin prices, the current reality is much worse for investors given the recent insolvencies back in June," Raju added.
"Events like this will shake retail investors to their core and give life to all those who have been demanding that the government regulate these firms better," Raju said.
The crypto industry is already facing spillover effects, with crypto lender BlockFi on Thursday halting all client withdrawals. Last year, BlockFi and FTX had agreed to let FTX US extend a $400 million credit facility to BlockFi, which would be acquired by FTX.
That deal now seems imperiled by the collapse of FTX on Friday.
