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FTX, the Bahamian cryptocurrency exchange founded by Sam Bankman-Fried, filed for Chapter 11 bankruptcy protection in the United States on Friday, along with over 130 affiliate companies.
This comes after the exchange halted user withdrawals due to insufficient liquidity, an issue Bankman-Fried assured would not affect their U.S. platform. FTX US is, however, among the companies filing for Chapter 11.
The Bahamas Securities Commission has frozen FTX’s assets and is conducting an investigation into whether the firm’s actions were unlawful. U.S. authorities are also investigating Bankman-Fried to determine if he violated securities rules, according to Bloomberg.
A great deal of wealth has been destroyed for FTX investors, users of the online exchange, and Bankman-Fried himself as a result of this fiasco.
Once hailed as the “new John Pierpont Morgan” and amassing a net worth of $26.5 billion, Bankman-Fried has, in a matter of days, fallen from grace and officially lost billionaire status, according to Forbes.
FTX users are potentially facing $8 billion in cumulative losses as the company scrambles to make up for the shortfall. Many are sounding the alarm on the billions that FTX lent to sister company Alameda Research, with The Wall Street Journal accusing FTX of using “customer accounts to fund risky bets.
