Crypto Exchange FTX Files For Bankruptcy, Ending a Week of Chaotic Deposit Runs

Cyptocurrency exchange FTX has filed for Chapter 11 bankruptcy protection and its CEO Sam Bankman-Fried is stepping down.

FTX CEO Sam Bankman-Fried
FTX founder and CEO Sam Bankman-Fried.
Tom Williams/CQ-Roll Call, Inc via Getty Images

Embattled cryptocurrency exchange FTX today (Nov. 11) said it is filing for Chapter 11 bankruptcy protection after a chaotic deposit run that drained the company’s cash reserve. Its 30-year-old founder and CEO, Sam Bankman-Fried, is stepping down, the company said.

FTX’s trouble started on Nov. 6, when Changpeng Zhao, CEO of rival crypto exchange Binance, tweeted his firm was liquidating its crypto position on FTX and questioned the company’s financial stability. Customers then rushed to withdraw their crypto holdings from FTX. The demand was estimated as high as $8 billion, and FTX didn’t have enough cash to cover it.

Bankman-Fried then struck a deal to sell FTX to Binance. But after reviewing the company’s financial documents, Binance pulled out of the agreement on Nov. 10, leaving FTX with few options to raise cash.

The situation led to a collapse in FTX’s private-market valuation. One of its leading backers, Sequoia Capital, on Nov. 10 marked its $210 million investment in FTX down to zero.

FTX has appointed John J. Ray III, a turnaround expert, as the company’s new CEO as it goes through the bankruptcy proceedings.

Crypto Exchange FTX Files For Bankruptcy, Ending a Week of Chaotic Deposit Runs