In an announcement that comes at little to no surprise, FTX, FTX.US, Alameda Research and “approximately 130 affiliated companies” have officially filed for Chapter 11 bankruptcy protection in the US.
Details of the 130 affiliated companies was not given, but certain subsidiaries including FTX Australia and FTX Express are not included in the Chapter 11.
Up until yesterday, FTX.US continued to operate, with founder Sam Bankman-Fried asserting that “FTX US, the US-based exchange that accepts Americans, was not financially impacted by this shitshow. It's 100% liquid”.
These words will likely bemuse US customers who will now see their funds held up in a lengthy bankruptcy process.
Press Release pic.twitter.com/rgxq3QSBqm
— FTX (@FTX_Official) November 11, 2022
Per the statement, Sam Bankman-Fried has resigned as chief executive officer but will “remain to assist in an orderly transition” for incoming chief executive John J. Ray III.
According to SEC filings, John J. Ray III previously worked in senior roles at Overseas Shipholding Group Inc and GT Advanced Technologies.
“The immediate relief of Chapter 11 is appropriate to provide the FTX Group the opportunity to assess its situation and develop a process to maximise recoveries for stakeholders,” said Ray.
Unfortunately for FTX customers, Chapter 11 could be a worst-case scenario: As unsecured creditors, customers could be back of the line for compensation.
A similar fate befell Celsius Network and Voyager Digital (CSE:VYGR, OTCQX:VYGVF) Customers when both lending platforms collapsed this year.