FILE — Sam Bankman-Fried speaks at the Crypto Bahamas conference in Nassau on April 27, 2022. The rapid collapse of the cryptocurrency exchange built by the billionaire Sam Bankman-Fried suggests that no company in the freewheeling, loosely regulated crypto industry is safe. (Erika P. Rodriguez/The New York Times) NYT
The Straits Times: November 11, 2022

Mr Sam Bankman-Fried’s crypto empire filed for Chapter 11 bankruptcy in Delaware, capping a rapid downfall for the companies.

Entities tied to, FTX US and trading firm Alameda Research Ltd were part of the filings, according to a Twitter statement on Friday.

Chapter 11 bankruptcy lets a company continue operating while it works out a plan to repay creditors.

Mr Bankman-Fried resigned as chief executive officer as part of the filings, and Mr John Ray III was appointed to replace him, the statement said.

Crisis quickly befell FTX this month after prices for the exchange’s native crypto token, FTT, plummeted and users raced to withdraw their assets.

Rival crypto exchange leader Changpeng “CZ” Zhao had earlier said he would sell some US$529 million (S$728.45 million) of FTT coins due to “recent revelations that came to light”.

Mr Zhao’s Binance Holdings tentatively agreed to buy amid the exchange’s liquidity crunch, but backed out of the deal following a short period of due diligence.

Singaporean global investment company Temasek is estimated to have invested US$205 million in FTX, with its investment hitting a value of US320 million at its peak in January 2022. On Thursday, venture capital firm Sequoia Capital marked down its FTX investment - worth about US$210 million (S$294 million) - to zero.

Crisis befell FTX in November after prices for the exchange’s native crypto token plummeted and users raced to withdraw their assets. PHOTO: REUTERS

FTX was scrambling to raise about UD$9.4 billion from investors and rivals, Reuters reported citing sources, as the exchange sought to save itself after customer withdrawals.

The predicament marks a rapid reversal for Mr Bankman-Fried, the 30-year-old crypto executive, whose wealth was estimated by Forbes at around US$17 billion just two months ago.

Mr Bankman-Fried reportedly faces an investigation by the US Securities and Exchange Commission, and crypto lender BlockFi has halted withdrawals due to the turmoil.

That’s on top of the Bahamas freezing’s assets, and the general counsel of FTX.US telling staff he’s working with advisers to preserve what they can of the exchange.

Bitcoin dropped as much as 8 per cent to US$16,376 as of 9.34am in New York. The largest digital asset by market cap had jumped 13 per cent on Thursday as the latest CPI print came in lower than expected, fuelling expectations that the Federal Reserve would slow the pace of interest-rate hikes.

Ether fell as much as 9.2 per cent. FTX’s FTT token declined up to 50 per cent on Friday. BLOOMBERG, REUTERS