About 130 companies affiliated with FTX have begun bankruptcy proceedings in the U.S. Sam Bankman-Fried (SBF) resigned as FTX CEO and was detained in the Bahamas.
FTX Trading, FTX US, West Realm Shires Services, Alameda Research, and “about 130 other companies” united as FTX Group initiated Chapter 11 bankruptcy proceedings in the District of Delaware. LedgerX, FTX Digital Markets, FTX Australia, and FTX Express Pay remain out of the proceedings. There’s no information on what will happen to these companies yet.
Along with the bankruptcy announcement, FTX Group announced that Sam Bankman-Fried resigned as FTX CEO. John Ray III took his place. Rumors emerged that SBF “fled” to Argentina, but the businessman denied them in a comment for Reuters. Later, similar speculations arose concerning the UAE but were later refuted. “Trusted sources” revealed during the Crypto Roundtable Show podcast that SBF got arrested in the Bahamas and was “under supervision” by the local authorities in Albany Tower, a resort located in New Providence.
This information is partially confirmed by the Royal Bahamas Police Force’s statement that a formal investigation into FTX had begun. In the wake of FTX’s bankruptcy filing, the Cyprus Securities and Exchange Commission (CySEC) ordered FTX Europe to “suspend its operations.” Earlier, a similar request was made by the Financial Services Agency of Japan, obliging FTX’s local division to switch to close-only mode and stop any other operations. In parallel, FTX US stopped trading and suspended fund withdrawals. It also became known that the crypto exchange Kraken froze accounts associated with “FTX Group, Alameda Research, and their executives” due to suspicion of fraud by the latter.
Amid this situation, FTX and FTX US hot wallets were hacked, as reported by Nansen analysts. Ryne Miller, General Counsel for FTX US, later confirmed it. He said access to hot wallets had been compromised, and company officials had moved them to cold storage to secure the remaining funds.
Blockchain analysts at Elliptic clarified that a total of $663 million in tokens on Ethereum, BNB Smart Chain, and Avalanche were withdrawn. Of that, $477 million was probably stolen, and the rest was moved to cold storage. Meanwhile, an admin in FTX’s official Telegram channel confirmed the hack and warned users not to visit the FTX website because it “might download Trojans.” Then, Plaid suspended FTX’s access to its products, as there were suspicious requests from FTX US to access its bank account information.
Changpeng Zhao (CZ), CEO of Binance, is actively commenting on the situation. During his speech at the Fintech 2022 Summit in Indonesia, he said that the industry has been “set back a few years now” and predicted stricter government regulation. He also stated that current events weren’t created “in the last three days,” as the problem had been building up for much longer.
CZ explained Binance’s intention to acquire FTX and the subsequent cancellation of those plans by the desire to “save the users,” which faced reports about fraud and investigations by U.S. government agencies. Binance CEO also advised users to keep their crypto-assets on their own. Recall that many circumstantial facts point to the fact that Changpeng Zhao contributed to FTX’s collapse and the current situation.
