Embattled crypto exchange FTX files for US bankruptcy protection, CEO resigns | Mint
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Business News/ Companies / News/  Embattled crypto exchange FTX files for US bankruptcy protection, CEO resigns
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Embattled crypto exchange FTX files for US bankruptcy protection, CEO resigns

The company was seeking a lifeline after a liquidity crunch due to customers withdrawing funds at a frenetic pace

The move comes days after larger rival Binance walked away from a proposed acquisition and left it scrambling to raise about $9.4 billion from investors and rivals (Photo: Bloomberg)Premium
The move comes days after larger rival Binance walked away from a proposed acquisition and left it scrambling to raise about $9.4 billion from investors and rivals (Photo: Bloomberg)

After its rival Binance walked away from the proposed acquisition, cryptocurrency exchange FTX announced on Friday that it was initiating bankruptcy proceedings in the United States. The company also informed that its CEO Sam Bankman-Fried will resign from his role.

FTX is suffering from a liquidity crunch after customers withdrew their funds at a frenetic pace. The company's rival Binance walked away from the deal at a time when the company is looking at raising about $9.4 billion from investors and rivals.

"As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX. In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help." Binance tweeted while walking away from the deal.

Binance also accepted that they expected in the beginning that they will be able to provide the required liquidity to the FTX customers, but after review realized that the issues are beyond its control and ability to help.

"Every time a major player in an industry fails, retail consumers will suffer. We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market,' Binance added in the Twitter thread.

Binance also hoped that the whole ecosystem will grow stronger once the regulatory frameworks are developed and the crypto industry evolves towards greater decentralization.

Meanwhile, SkyBridge Capital is working to buy back its stake from FTX, the alternative investment firm's founder Anthony Scaramucci said in an interview with CNBC on Friday.

"My legal team and my other partners are working to buy back that stake to take him off of our cap table," he said, referring to Sam Bankman-Fried, FTX's founder.

SkyBridge has no assets under custody at FTX, according to Scaramucci. "We thought that was a potential conflict of interest."

FTX was facing financial issues for a while now and had suspended the on-boarding of new clients as well as withdrawals until further notice. The bankruptcy fans the concerns about the future of the crypto industry, which faces an uphill task of regaining favor among retail investors after several blowups this year.

 

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Published: 11 Nov 2022, 08:08 PM IST
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